British economy shrinks sending pound into a nosedive - Summary
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Wed, 29 Oct 2008 06:32
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London - The British economy has shrunk for the first time in 16 years, the Office for National Statistics said Friday, sending shares and the pound into a tailspin. The release of the figures showing the economy in the European Union's second biggest economy shrinking 0.5 per cent in the three months to the end of September triggered a major sell-off of the pound, which recorded its biggest fall in 37 years to drop below 1.53 dollars. At the same time, shares in London, which is Europe's leading stock exchange, tumbled by more than 7 per cent following the release of the latest growth data. The figures confirmed predictions that Britain was on the brink of recession. If the economy declines in the last three months of 2008, Britain will officially be in recession. Echoing remarks by Bank of England chief Mervyn King, British Prime Minister Gordon Brown warned Wednesday that the European Union's second biggest economy was unlikely to avoid a recession as global economic growth contracts.
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