Britain has officially entered a recession today, official government figures have revealed.
The country’s gross domestic product dropped by 1.5% in the last three months of 2008, following a 0.6% drop in GDP in the third quarter of last year.
A recession is broadly defined by two quarters of falling economic growth while the most recent drop have been the sharpest since 1980.
The news prompted a further fall in sterling against the dollar, with the pound falling to $1.355, leaving it at a 24-year low, while the FTSE index fell by 2% below 4,000 points.
The manufacturing sector was the worst hit in the last quarter as it dropped 4.6% while the services sector, which accounts for nearly three quarters of the UK’s economy, fell by 1.5%.
The latest figures have fuelled a number of warnings by City analysts, who now believe the recession could last as long as two years while the consensus figure for 2009 is a 2.1% decline in GDP.
This is far worse than even recent forecasts. Only in December forecasters were warning of a 1.5% drop in GDP.