Economists predict slide in British economy

LONDON, Oct. 5 (UPI) -- England is lapsing into recession despite the $700 billion U.S. government bailout of the American financial industry, economists say.

The Royal Bank of Scotland, JP Morgan, Credit Suisse, Citigroup and Barclays Capital cut growth predictions this weekend and warned that Britain faces a deep recession, The Times of London reported Sunday. They said unemployment could rise by 1 million people.

The newspaper reported that economists fear Britain could see its economy shrink for at least two consecutive quarters.

For its part, RBS predicts the British economy will shrink by 0.3 percent during the third quarter and a further 0.3 percent in the final three months of this year. RBS also predicts 700,000 people will lose their jobs between now and the end of next year.

"The real problem is not the consumer; it's the corporate sector, which we now expect to slow much faster than we initially thought," said RBS economist Ross Walker.

Citigroup, meanwhile, painted an even gloomier picture, predicting that consumer spending will see a bigger drop next year than in the worst years of the last three big recessions.

"Recent data and surveys make it clear that … the recession is likely to be deep and severe," said Citigroup economist Michael Saunders.