More bad news as EU says Britain will suffer worse in the downturn

The latest Eu half yearly forecast throw some doubt at the government's assertion that we are better placed to weather the storm.

Amongst its most gloomy predictions,unemployment up to 2.25 million,negative growth at 1% next year and a budget deficit of 6.5% by 2010 or £80b.

Only Estonia and Latvia are expected to suffer bigger downturns next year,the three big economies of France,Germany and Italy will merely stagnate.

Pessimistic forecaster at the Eu though make it clear that these figures could be even worse due to the countries exposure to the collapsing housing market and over-reliance on the financial sector.

As for the spend your way out of recession strategy,well Joaquin Almunia, European Economic and Monetary Affairs Commissioner warned governments not to do it in times of contracting tax revenues.

More bad news in the financial sector as it has emerged that the merger of Lloyds TSB and Hbos could result in 30,000 job losses as the new company looks to cut costs by £500 million

And bad news comes in three's as Manufacturing output continues to fall.For the sixth month in a row the purchasing and Supply/Markit index was below 50 points indicating contraction