Britain's economy is about to suffer its most vicious slump since 1946, shrinking by a drastic 2.8% this year, Brussels warned yesterday, as fears over the scale of the recession mounted despite the new banking bailout.
In a dire assessment that threatens to leave Alistair Darling red-faced at a meeting of European Union finance ministers today, Brussels predicted that the UK would suffer the worst recession of any large European economy.
The European Commission's grim forecast of Britain's outlook points to a toll this year more than twice as bad as the worst-case scenario in the Chancellor's Pre-Budget projections. Mr Darling had pinned his hopes on GDP falling by no more than 1.25%, although he has admitted since then that this rosy view would have to be ditched. The warning is the most authoritative yet that the economy's plight will prove far worse than the Treasury has acknowledged. It comes as a growing number of independent economists are predicting a contraction in GDP of 2.5% or more this year.