MercoPress. South Atlantic News Agency

Britain in recession and fears of prolonged contraction

The UK economy has ground to a complete halt

Britain has officially entered recession after figures showed the worst economic output since 1980, sparking fears of a deep and prolonged contraction. The economy shrank by a worse-than-expected 1.5% in the final three months of 2008, according to the Office for National Statistics (ONS).

The plunge is worse than the declines seen in the recession of the early 1990s and the biggest fall in more than 28 years. But Chancellor Alistair Darling urged the public to give his economic policies time to work. And he declined to publicly restate his previous forecast of recovery later this year as City experts predicted output would continue to decline for the whole of 2009. Official figures showed the economy shrank by 1.5% in the fourth quarter of last year - the biggest fall in more than 28 years and the second consecutive quarter of negative growth. Asked if that rendered his Pre-Budget Report predictions of positive figures by the third quarter of this year "fantasy", Mr Darling told Sky News: "What we said at the Pre-Budget Report is we did expect there to be a significant downturn in this last period and indeed we have seen that. "It is undoubtedly sharper than many people believed, partly because you have seen industrial production go down because of course the export markets have been badly affected, particularly by the slowdown in the Far East and the euro area - Germany for example. "But what is important is that we make sure we have a clear sense of purpose and a determination to do whatever is necessary to get ourselves through this period, whether it is supporting the banking system, getting lending going to people or making sure that we help people and businesses. "The tax reductions I announced last autumn, bringing forward constructions projects; they are all important if we are going to take action that will help us get through the recovery".