Ireland enters recession

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The Republic of Ireland's economy has fallen into recession. Its Central Statistics Office said gross domestic product had contracted by 0.5 per cent in the three months to the end of June, following a 0.3 per cent fall in the first quarter of the year.

The country is being hit by a slump in construction, rising unemployment and soaring inflation. A recession is defined as two or more successive quarters of negative growth.

It is Ireland's first recession since 1983. During the late 1990s, the economy, dubbed the Celtic Tiger, delivered rapid growth, partly driven by an attractive tax regime for foreign companies. This month, the European Commission predicted that the UK, Germany and Spain would also fall into recession before the year is out.

A government spokesman said: "As expected, lower levels of new house building had a major restraining influence on growth in the second quarter, as is evident from the very weak investment figures."