Recession to hit UK and EU

Recession is a contraction phase or a period of reduced economic activity. A significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in GDP, growth, real personal income, employment (non-farm payrolls), industrial production, and wholesale-retail sales. The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country gross domestic product. It generally lasts from six to eighteen months.

Great Britain is suffering from the deepest recession among the EU mature economies, with a contraction of one per cent next year and growth of only 0.4 per cent in 2010. Its half yearly forecast shows UK unemployment rising from 5.3 per cent in 2007 to 7.1 per cent, or about 2.25 million, in 2009 with the budget deficit and government debt also surging.

The deficit seems upwards jump to 5.6 per cent next year and 6.5 per cent in 2010 while debt is forecast to rise some 15-percentage points to about 60 per cent in 2010 and 2011. The bleak forecasts blow a hole in the government's much-vaunted assertion it has been running the European Union's model economy for the past decade. The EC is forecasting EU growth of 0.2 per cent in 2009 and euro zone growth of 0.1 per cent.

Germany, France, and Italy, the euro zones three giants and base pillars of European Union, will stagnate next year while Ireland will contract 0.9 per cent before recovering to 2.4 per cent growth in 2010. Ireland's budget deficit is schedule to be higher than Britain at 6.8 per cent in 2009 and 7.2 per cent in 2010. Only Estonia and Latvia will suffer deeper recessions than European Union in next year 2009, falling 1.2 per cent, and 2.7 per cent respectively.

Its forecast comes ahead of recent week expected moves by the Bank of England and European Central Bank to cut interest rates by up to half a percentage point as governments adopt new fiscal stimulus packages help lead the way out of recession across Europe Union.

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• Economics
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• UKRecession
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• EURecession
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• Recession
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