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Fears are growing that Britain may be headed for a triple-dip recession. Figures out today show that the U.K. economy shrank by 0.3 percent in the last three months of last year. If, as some economists forecast, the economy contracts again this quarter, Britain will have slipped back into its third recession in a row.
This bad news comes at the end of a difficult week for British business. Many large British companies are still reeling from the news that Prime Minister David Cameron plans to hold a referendum on whether the U.K. should leave the European Union.
Many British business leaders have condemned the planned vote. They argue that it damages confidence as it raises the prospect of the UK being shut out of a market that buys one half of all their exports.
But there have been some words of encouragement for the U.K. from the World Economic Forum at Davos in Switzerland. Speaking at the Forum, the head of the World Trade Organization, Pascal Lamy, said that leaving the EU wouldn’t necessarily curtail Britain’s trade with Europe:
“We have examples of countries who are not members of the EU — like Norway and Switzerland — and their trade with the EU is open. Maybe not as open as if you’re a member of the European Union, but open,” says Lamy.
Critics of the British referendum, however, say that the full impact of leaving the EU is unsure. And since the vote will not be held until 2017, British exporters face five years of uncertainty.