British economy may be in recession

LONDON, Aug. 23 (UPI) -- Britain may be moving closer to a recession as economic growth came to a standstill in the second quarter, government officials said.

The Office for National Statistics lowered its growth estimates from 0.2 percent to zero in the period ending in June. Annual growth has slowed to 1.4 percent, Britain's lowest rate since late 1992. Household spending has dropped by 0.1 percent and investment by companies fell by 5.3 percent.

Some analysts say the economy is now on course toward recession, as defined by two quarters of declining gross domestic product, in the second half of 2008, The Guardian reported Saturday. They also suggest government predictions of 2.5 percent growth in 2009 now appear even more overly optimistic.

"The economy now looks set to grow by just 1.2 percent or so this year, with a very strong chance of a technical recession in the second half," Jonathan Loynes of Capital Economics said. "And things will be considerably worse in 2009."

Diana Choyleva of Lombard Street Research agreed with the assessment.

"There is nowhere for the UK consumer to go but to continue to retrench," she said. "Real income growth

has slumped as inflation accelerated while nominal pay growth remained subdued."