Data released from the U.K. shows the economy there has not been in as bad shape since Margaret Thatcher was Prime Minister showing the recession is biting there harder than expected.
GDP fell 1.5 percent from the previous quarter, according to the Office of National Statistics. That’s worse than the 1.2 percent decline predicted by economists surveyed by Bloomberg News. Since GDP has now shrunk for two quarters, the U.K. has now joined the recession "club."
Stocks in the U.K. tanked on the report, which underscores the growing political trouble facing the current Prime Minister Gordon Brown who has vowed to use "every weapon at our disposal" to fight the financial crisis. Good luck with that one.
The economy has contracted the most since 1980. U.K. manufacturing confidence also has not been as week since the dawn of the Thatcher era. Last year, the economy had its lowest growth since 1992.
"Service industries shrank by 1 percent on the quarter,manufacturing dropped 4.6 percent and construction fell 1.1percent," Bloomberg said. "Business services andfinance, accounting for 30 percent of the economy, contracted 0.5percent and also slipped into a recession."
Things are only going to get worse. The European Commission is forecasting that the U.K.’s economy will contract 2.8 percent this year, a figure not seen since 1946!.
The recession in the U.K. will be long and painful. Americans can take comfort in knowing that the world feels their pain.