British pound slides to 24-year low

LONDON, Jan. 24 (UPI) -- The British pound has fallen to its lowest level relative to the U.S. dollar since 1985 in the wake of statistics showing a shrinking economy, observers said.

The pound sterling on Friday slid by more than three-quarters of a cent against the dollar to $1.3668, the lowest level in 24 years. Britain's Office for National Statistics announced the economy shrank by 1.5 percent in the final three months of 2008, putting the country officially in a recession, The Daily Telegraph reported.

The grim economic news represented the sharpest three-month contraction of Britain's gross domestic product since the second quarter of 1980 and follows a 0.6 percent fall in GDP for the third quarter of 2008, analysts said.

"It is not just the fact that the U.K. has officially entered recession that will cause concern; it is the size of the contraction," Charles Davis of the Center for Economics and Business Research told the Telegraph. "This supports our view that in 2009 the economy is set for the steepest contraction in the post-War era, with a fall in the region of 3 percent year-on-year."