LONDON, August 22, 2008 (AFP) – Britain’s economy stopped growing in the second quarter of 2008, recording the weakest quarterly growth rate for 16 years and leaving the country on the brink of recession, analysts said Friday.
The news is a major blow to British Prime Minister Gordon Brown, whose governing Labour Party faces a hammering at the opinion polls, and who had prided himself on economic prudence during his time as finance minister.
In reaction, the British pound dropped close to two-year lows against the dollar and London’s FTSE 100 index of leading companies surged more than one percent higher, as markets priced in possible interest rate cuts to remedy stagnant growth.
The 15-nation eurozone economy, of which Britain is not a member, also swung towards recession in the second quarter as it shrunk for the first time in its short history, it emerged earlier this month.
Prior to the second quarter, the British economy had enjoyed 63 consecutive quarters of expansion, much of which had been under Brown’s tenure as chancellor of the exchequer between 1997 and 2007.