Economy 'on brink of recession'

Leading City forecasters today warned the country is on the verge of recession as the credit crunch takes its toll on consumer spending.

Official figures showed the economy grew by just 0.2% in the second quarter - down from 0.3% in the first quarter and the worst performance in seven years.

It was another blow to Gordon Brown and his reputation for economic competence.

A sharp slowdown in the housebuilding and construction market was the main drag and left Britain facing its first recession since the early 1990s.

"The UK is on the brink of recession," said Hetal Mehta at the Ernst & Young Item Club.

Recession is defined as two consecutive quarters of contraction in the economy and experts reckon that could happen over the final two quarters of this year.

Geoffrey Dicks, chief economist at Royal Bank of Scotland, said: "After an unbroken run of 64 quarters, the first negative quarter since 1992 appears to be under way."

Growth of just 0.2% between the first and second quarters of the year left the annual rate of expansion at 1.6%, the lowest since 1993 when the country was coming out of its last recession.