UK to be ‘worst hit’ in EU by coming recession
Tuesday 4th November 2008, 2:37PM GMT.
The European Commission has made a grim prediction for the UK next year with high unemployment, a spiralling deficit and a contracting economy all potentially on the agenda.
The Commission’s autumn forecast shows only Estonia and Latvia are expected to suffer more from the recession in 2009, while other EU countries recover.
During 2009, the economy is expected to contract by one per cent, recovering slightly to 0.5 per cent growth in 2010.
Unemployment is also forecast to rise to 7.1 per cent in 2009, from the current level of 5.7 per cent, which would mean 2.25 million out of work.
As unemployment grows and spending falls, the government will receive less in tax receipts, pushing the deficit to six per cent in 2009.
“The central outlook envisages a marked fall in private consumption in 2009 and 2010, driven by more restrictive borrowing conditions and lower household wealth,” the Commission warned.
For the European Union as a whole, economic growth is expected to drop to 0.2 per cent in 2009 before recovering gradually to 1.1 per cent in 2010.
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