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Britain 'to fall into recession' | Britain 'to fall into recession' |
(20 minutes later) | |
The UK, Germany and Spain will fall into recession in 2008, the European Commission has predicted. | The UK, Germany and Spain will fall into recession in 2008, the European Commission has predicted. |
Brussels said the three countries would see two negative quarters of economic growth in a row, which is the technical definition of a recession. | Brussels said the three countries would see two negative quarters of economic growth in a row, which is the technical definition of a recession. |
In its latest economic forecast, the commission also downgraded its outlook for eurozone growth once again. | In its latest economic forecast, the commission also downgraded its outlook for eurozone growth once again. |
It said the 15-nation bloc would now grow by 1.3% this year, against previous projections of 1.7%. | It said the 15-nation bloc would now grow by 1.3% this year, against previous projections of 1.7%. |
Earlier this month, data showed the region's economy shrank by 0.2% between April and June - the bloc's first decline since its creation in 1999. | Earlier this month, data showed the region's economy shrank by 0.2% between April and June - the bloc's first decline since its creation in 1999. |
The contraction was driven by a slowdown in exports and consumer spending. | The contraction was driven by a slowdown in exports and consumer spending. |
But high inflation in the region led policy makers at the European Central Bank to keep interest rates at 4.25% at its latest meeting, allowing no relief for the eurozone's slowing economies. | But high inflation in the region led policy makers at the European Central Bank to keep interest rates at 4.25% at its latest meeting, allowing no relief for the eurozone's slowing economies. |
In its latest report, the Commission warned that inflation was likely to creep up to 3.6% in the eurozone - above its previous predictions of 3.2% and way above the government's target of 2%. | |
Economic and Monetary Affairs Commissioner Joaquin Almunia blamed ructions in the financial markets, soaring commodity prices and the housing slump for the gloomy outlook. | |
"In a context of an unusually high degree of uncertainty, the external headwinds not only had a direct adverse impact on inflation and capital costs, but also an indirect one on confidence," he said. | "In a context of an unusually high degree of uncertainty, the external headwinds not only had a direct adverse impact on inflation and capital costs, but also an indirect one on confidence," he said. |