New figures announced today show that the British economy shrank by 0.3% in the fourth quarter of 2012, raising fears that the country is on the verge of a third recession since the beginning of the global financial crisis.
The 0.3% economic contraction is worse than the 0.1% fall which forecasters had predicted, and looks especially bad next to the 0.9% growth of the previous quarter. A fall in manufacturing output, reduced North Sea oil production, and the effects of the London Olympics have all been blamed for the fall. The British economy is now 3.3% smaller than its 2008 peak prior to the start of the credit crunch.
The £GBP fell to its lowest level against the Euro in over a year on the back of the news, although this was also partly due to the Euro rising on good news from Germany.