Euro crisis will trigger UK recession in 2012 - Capital Economics

Capital Economics has said the eurozone debt crisis will have "severe adverse effects" on the UK economy, pushing it back into recession in 2012.

The forecaster said it now expects UK GDP growth to slow from around 0.8% this year to around zero in 2012, with a significant chance of a technical recession. The firm is predicting two successive quarters of negative growth next year. Chief European economist Jonathan Loynes said the adverse impact of the crisis on UK exports to the eurozone could knock over one percentage point off UK GDP growth. That, coupled with high unemployment levels, downward pressure on consumer incomes and the government's fiscal squeeze, make it difficult to envisage the UK economy managing even modest gr...