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Brown: UK heading into recession

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  • Gordon Brown: UK, other major economies heading into recession
  • Bank of England governor Mervyn King: UK economy now likely in recession
  • Pound drops nearly 3 percent against the dollar following his comments
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LONDON, England (CNN) -- British Prime Minister Gordon Brown said Wednesday that the global financial crisis was pushing his country and other major world economies towards recession.

Gordon Brown said the global financial crisis was pushing Britain into recession.

Gordon Brown said the global financial crisis was pushing Britain into recession.

Brown's warning follows similar gloomy predictions a day earlier by Bank of England Governor Mervyn King, who also hinted at further interest rate cuts to come, prompting the pound to slump nearly five U.S. cents against the dollar.

"Having taken action on the banking system, we must now take action on the global financial recession, which is likely to cause recession in America, France, Italy, Germany, Japan, and -- because no country can insulate itself from it -- Britain, too," Brown told the House of Commons.

On Tuesday, King used the term recession for the first time amid the current banking crisis in an address to business leaders in the northern English city of Leeds.

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"Taken together, the combination of a squeeze on take-home pay and a decline in credit poses the risk of a prolonged slowdown in domestic demand, and now looks likely the UK economy is entering a recession," he said.

King also described the crisis as the worst in more than 90 years, saying, "Not since the beginning of the First World War has our banking system been so close to collapse."

The traditional definition of a recession is two consecutive quarters of negative gross domestic product, or GDP, growth.

Preliminary British GDP growth was 0.0 per cent in the second quarter of 2008, unrevised from the previous estimate, according to Britain's Bureau of National Statistics. Results for the third quarter are expected Friday.

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