Wed, Dec 24, 2008 - Page 12 News List

Britain nears recession as IMF economist frets

AFP , LONDON

Britain edged ever closer to a recession yesterday as the IMF’s top economist warned of a second Great Depression.

Britain’s economy shrank by 0.6 percent in the three months to September compared with the previous quarter, against a previous estimate of a 0.5 percent contraction from last month, the Office for National Statistics said.

Britain will officially be in recession if the economy contracts again in the fourth quarter after already screeching to a halt in the second quarter, during which this key EU economy recorded zero growth.

“Contraction of 0.6 percent in the third quarter was even sharper than previously anticipated, highlighting the serious downturn in the economy,” said Howard Archer, an economist at the IHS Global Insight consultancy in London.

Top IMF economist Olivier Blanchard said that governments around the world should boost domestic demand in order to avoid a Great Depression similar to the downturn that shook the globe in the 1930s.

“Consumer and business confidence indexes have never fallen so far since they began. The coming months will be very bad,” Blanchard said in an interview with French newspaper Le Monde.

“It is imperative to stifle this loss of confidence, to restart household consumption, if we want to prevent this recession developing into a Great Depression,” he added.

New data out in France offered some respite from the gloom, however, showing that household consumption of manufactured goods — a key growth indicator — rallied 0.3 percent last month after slumping in October.

But in Italy, retail sales figures went down 0.3 percent in October.

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