MercoPress. South Atlantic News Agency

EC forecasts recession ahead for UK, Spain and Germany

United Kingdom is forecasted to fall into recession by the end of the year alongside Spain and Germany after a “sharper than expected” slowdown, the European Commission has predicted.

In its latest outlook, the EC warned that UK GDP would shrink by 0.2% per quarter in the second half of the year, while Spain and Germany would also slide into a technical recession. The statement follows a similar downward revision by the Organisation for Economic Co-operation and Development (OECD) which said growth in the region as a whole would be "broadly flat" this year. The commission predicts Spain's GDP growth will fall by 0.1% in quarter three, before shrinking by 0.3% in the final quarter of 2008. Meanwhile the German economy, which shrunk by 0.5% in the second quarter, is to decline by another 0.2% in quarter three, before recovering in the final quarter of 2008. Two quarters running of negative growth comply with the technical definition of a recession. In total, the commission said the UK would grow by 1.1% year on year, down from its previous estimate of 1.7%. The EC also revised its forecast for economic growth in the European Union down to 1.4%, from a previous prediction of 2%, and for the Euro area to 1.3%, from 1.7%. In a statement the commission said: "as global headwinds intensify the prospects for economic growth in the Euro area and the EU worsen and inflation has not yet started to moderate". While the fundamentals in the Euro area and EU economy as a whole were sound, "tensions in financial and asset markets, ongoing moderation in the world economy, the elevated levels of commodity prices and a widening housing shock were all taking their toll".