Shadows lengthened over the British economy on Wednesday after the European Commission revised its economic forecast, becoming the second international body to predict gross domestic product will contract in the second half of 2008.

Brussels is now forecasting that GDP growth will fall by 0.2 per cent in each of the third and fourth quarters of this year, an even sharper slowdown than that predicted by the Organisation for Economic Co-operation and Development last week. The OECD is predicting contraction at less than 0.1 per cent per quarter.