Recession set to hit UK

The UK will slip into recession this year along with Germany and Spain, according to the European Commission.

The body predicts the UK economy will shrink by 0.2% in each of the next two quarters, enough for it to meet the technical definition of recession of two consecutive quarters of negative growth.

The latest official figures from the Office for National Statistics revealed the economy stagnated during the second quarter of 2008 with no positive or negative growth.

The European Commission also suggested inflation would rise to 3.6% in the eurozone, an increase on its previous predictions of 3.2%.

At its last meeting the European Central Bank kept interest rates on hold at 4.25%.