UK Economy To Shrink Further

UK Economy To Shrink Further.

According to economists at Standard Chartered bank, the UK economy is to contract by more than previously thought.  It is now thought the economy will contract by 1.3% in 2012, although it was previously predicted to grow by 0.6%.

The bank also forecast that the eurozone economy will contract by 1.5%.  Standard Chartered believe that the escalating crisis in advanced economies, especially the eurozone, has forced it to revise down its own forecasts.

According to Standard Chartered economist Thomas Costerg, he believes there will be a triple shock to the European economy, which will cause a recession, not just in the eurozone but also in the UK.  The first being a confidence crisis, consumers spend less and businesses invest less.  The second is that banks are tightening credit owing to the credit squeeze and the third is national governments tightening budgets all over Europe.