British economy shrinks by 0.5%

The British economy shrank 0.5% in the third quarter of 2008, substantially more than expected and the first contraction in 16 years, official data showed last week.


The British economy shrank 0.5% in the third quarter of 2008, substantially more than expected and the first contraction in 16 years, official data showed last week. The news prompted fears that recession was all but inevitable and investors began a sell-off of equities which caused the FTSE 100 to fall by over 7% when trading opened on Friday. Sterling fell to its lowest against the dollar in six years. The eurozone also showed signs of weakening with the October Purchasing Managers’ Indexes indicating activity at its lowest since 1998.