Britain has officially sunk into recession, with its economy shrinking
by 1.5 percent in the fourth quarter of last year. This comes amid the growing financial
crisis around the world.
It's official - the British economy is in recession. Government figures released Friday show the economy contracted by a larger than expected 1.5 percent in the last three months of 2008, after a 0.6 percent drop in the previous quarter.
Britain's finance chief, Chancellor Alistair Darling acknowledged the
economy had taken a sharper downturn than anticipated.
"If you look at today's figures, what you're seeing is a very significant fall in industrial production and that's been caused because world trade has really fallen away very rapidly over the past few weeks and months," said Chancellor Darling.
What started as a crisis in the financial sector in Britain continues to infect the wider economy. Unemployment is accelerating sharply, with nearly two million people now out of work, the housing market remains severely depressed and retail sales are weak. For the U.K., Friday's figures show the biggest decline in nearly 30 years.
But, Chancellor Darling was quick to point out Britain is certainly not alone.
"We're facing this problem everywhere," he said. "America has been in recession for a year now, even Germany, Italy, Japan. Countries in the Far East are seeing a substantial slowdown in growth."
The British government has moved to bail out failing banks and has put in place a multi-billion dollar stimulus package to shore up the ailing economy, including a cut in the national sales tax and help for businesses, homeowners and low-income families.
Prime Minister Gordon Brown says these measures will work, but he says there needs to be a coordinated international effort.
"What we need is a degree of international cooperation here, so that all countries who are affected by this can work together to do similar things," he said.
Mr. Brown says he is talking with world leaders about ways to overcome this crisis.
Britain is due to host the next financial crisis summit of the G-20 group of industrialized and emerging economies in April.