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Recession looms large over Britain, EU

London: In what is widely rated as the “worst economic scenario,” recently released economic data suggest that the British economy has come to a halt. The second quarter economic data revealed that 16 years of steady economic growth has ended. The currency has hit the lowest level for more than 11 years. Analysts indicate that Britain is facing the dire prospects of an economic recession. This puts an end to the longest period of uninterrupted economic growth in British history, highlighted by record high living standards and enviable social security system. It is also rated as an end to almost two decades of increasing employment, disposable income and record high residential and commercial property prices.

Housing prices fell by a quarter in June and in the commercial property market there is that “sinking feeling” of unease and uncertainty about future growth prospects. The fall of currency rates would increase pressure on the Bank of England to ease monetary policy.

The only silver lining is that oil prices are falling. However, this may not stimulate economic growth but merely check inflationary pressure.

As recession fears loom over the world’s advanced economies, economists observe the economy is already contracting and are forecasting negative growth for the rest of the year. The Tory opposition has criticised Prime Minister Gordon Brown’s economic strategy by suggesting the government’s economic “bubble has burst.”

Falling property prices and record high consumer debt may further accelerate economic recessionary process, said prominent bankers. The latest data from office of National Statistics show a slump in the economy as the credit crunch and rising cost of living take their toll. Investment spending fell by 5.3 per cent as inventory in retail outlets begin to pile up. The service sector, rated as the driving force behind the economy, is faced with negative growth prospects.

In EU countries, current economic data is fuelling recession jitters as it is revealed that business activity in the 16-country Euro zone region also contracted for a third straight month in August, according to a latest survey. Many economists observed that the EU’s economy is heading for a technical recession in the background of two consecutive quarters of declining output.

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