The International Monetary Fund dashed all hopes of a quick recovery from the current economic downturn today when they announced that the UK would plunge into the deepest recession of any industrialised country this year…
The British economy will be the hardest hit in the developed world as the recession continues to bite.
Last week, it was confirmed that the UK had officially fallen into recession and now the International Monetary Fund (IMF) has announced that a downturn of this scale has not been seen since the Second World War.
The Office for National Statistics revealed that the UK economy slumped by 1.5 per cent in the final three months of last year and over 2008 as a whole, the economy shrank by 0.7 per cent.
Now, the UK seems to be compounding fears that it is set for a prolonged recession, with the IMF saying that the country is set for a bigger slowdown than both Europe and America.
The IMF forecasted that output will fall by 2.8 per cent this year, the worst performance since records began in 1948. They had originally predicted a fall of 1.3 per cent back in November, so this latest figure reveals the depth of the crisis.
The IMF says GDP will shrink in the U.S. by 1.6 per cent, France by 1.9 per cent, Germany by 2.5 per cent and Japan by 2.6 per cent. These figures put Britain bottom in the league table of major industrialised countries.
Financial experts are suggesting that the reason Britain looks set to be the worst affected is due to ‘huge levels of personal debt and an over-reliance on the financial sector, which have made the country particularly vulnerable.’ The sterling is also sitting at a 23 year low against the dollar.
Prime Minister Gordon Brown has admitted to a ‘deep recession,’ and his statement that the UK was well placed to deal with the recession now seems rather an empty promise as the country faces the worst economic crisis in decades.
The Bank of England has already slashed borrowing costs by three-and-a-half percentage points since October to shore up the economy, and experts are saying that rates may well be cut further from the current 1.5 per cent.
On a global scale, the IMF found that growth will collapse to just 0.2 per cent. Another nail in the coffin is today’s warning from the United Nations agency that more than 50 million jobs could disappear around the world this year.
After years of property booms and economic bubbles, we are finally facing the correction.
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