The UK will be in recession by the end of the year, according to a forecast from the EU Commission.

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.

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 is expected to slow sharply while inflation will remain high for some time.

The EU Commission 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.

Last week, the Organisation for Economic Co-operation and Development (OECD) also predicted a recession for the UK.