Opposition blames Brown as EC predicts recession
Economy facing recession by end of year, EC predicts
Wednesday, 10, Sep 2008 12:00
The European Commission's prediction that the UK will be in recession by the end of the year has prompted a further wave of criticism about Labour's handling of the economy.
The latest economic forecast from the Commission shows two quarters of negative growth for the last half of 2008 in Britain, the definition of a recession. For the whole year, the Commission expects the UK economy to grow by just 1.1 per cent.
The Conservatives, having earlier this week announced they expect to inherit an "economic mess" after their victory in the next general election, have called for a "long-term economic recovery plan".
And the Liberal Democrats' economic spokesperson Vince Cable has blamed Gordon Brown for allowing the economy to get "hopelessly out of control".
The prime minister responded to news of the recession prediction by referring to the global economic situation in a press conference at Downing Street this lunchtime.
Speaking alongside Italian counterpart Silvio Berlusconi, Mr Brown blamed the combined effect of the credit crunch and high energy and food prices for the "difficulties" currently facing "all European economies".
"I believe that while many of the European economies have had negative growth already, we as the British economy are placed better than in previous downturns."
He argued low interest rates, high employment and low national debt would help Britain get through "this period of difficulty".
Today's report from the EC predicted UK inflation is set to peak at its current level of 4.4 per cent, falling to 4.3 per cent in the final quarter, according to the report.
Growth in the EU overall is expected to slow sharply while inflation will remain high for some time.
The EC cut its annual growth forecast for the European Union by 0.5 per cent to 1.4 per cent this year – 1.3 per cent in the euro area - as financial turmoil deepens and commodity prices soar.
The latest report is a revision from the Commission's April predictions, which were more optimistic.
"The main downside risks identified in the spring forecast have materialised, with financial turmoil deepening and reinforcing the ongoing correction in house prices, commodity prices soaring and fuelling inflation, and the slowdown of global growth spreading more widely," the Commission said in the report.