Fourth-quarter GDP decline steepest since 1980 The British economy contracted sharply in the final three months of 2008, shrinking 1.5% compared to the previous quarter, the Office for National Statistics reported Friday. The data confirmed widely held expectations that the U.K. economy had entered its first recession since 1991. What's more, the quarterly contraction was the deepest since 1980. Stocks slumped, with London's FTSE 100 index falling below the 4,000 level for the first time since early December. The battered British pound came under renewed pressure as well, falling 2.3% versus the U.S. dollar to $1.3560 and setting a new 23-year low versus the greenback. The decline follows a 0.6% contraction in the third quarter and meets a widely used definition of a recession as at least two quarters of shrinking GDP. The economy contracted 1.8% compared to the fourth quarter of 2007, the ONS said, following a 0.3% year-on-year rise in the third quarter. For most economists, the decline was a foregone conclusion. But the steepness of the fall still offered a surprise. A survey of economists by Dow Jones Newswires had produced a consensus forecast for a 1.3% quarterly decline and 1.4% annual fall.

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