Britain has officially sunk into recession, with its economy shrinkingby 1.5 percent in the fourth quarter of last year. This comes amid the growing financialcrisis around the world.
It's official - the British economy isin recession. Government figures released Friday show the economycontracted by a larger than expected 1.5 percent in the last threemonths of 2008, after a 0.6 percent drop in the previous quarter.
Britain's finance chief, Chancellor Alistair Darling acknowledged theeconomy had taken a sharper downturn than anticipated.
"If youlook at today's figures, what you're seeing is a very significant fallin industrial production and that's been caused because world trade hasreally fallen away very rapidly over the past few weeks and months,"said Chancellor Darling.
What started as a crisis in thefinancial sector in Britain continues to infect the wider economy.Unemployment is accelerating sharply, with nearly two million peoplenow out of work, the housing market remains severely depressed andretail sales are weak. For the U.K., Friday's figures show the biggestdecline in nearly 30 years.
But, Chancellor Darling was quick to point out Britain is certainly not alone.
"We'refacing this problem everywhere," he said. "America has been inrecession for a year now, even Germany, Italy, Japan. Countries in theFar East are seeing a substantial slowdown in growth."
TheBritish government has moved to bail out failing banks and has put inplace a multi-billion dollar stimulus package to shore up the ailingeconomy, including a cut in the national sales tax and help forbusinesses, homeowners and low-income families.
Prime Minister Gordon Brown says these measures will work, but he says there needs to be a coordinated international effort.
"Whatwe need is a degree of international cooperation here, so that allcountries who are affected by this can work together to do similarthings," he said.
Mr. Brown says he is talking with world leaders about ways to overcome this crisis.
Britain is due to host the next financial crisis summit of the G-20 group of industrialized and emerging economies in April.