PM: Economic policy will not change
Pressure on the Government's economic strategy has intensified after shock figures showed Britain's faltering economy is back in recession.
Prime Minister David Cameron said the estimated 0.2% quarterly decline in GDP was "very, very disappointing" but insisted there will be no change to the coalition Government's programme of austerity and deficit reduction.
A slide in construction output and a stagnant services sector were blamed for the surprise slump which, after a fall of 0.3% the previous quarter, has caused the UK's first double-dip recession since the 1970s.
Experts said the first-quarter figure, which compared with City forecasts for growth of 0.1%, painted an unduly pessimistic view of the economy and there was a danger that the UK's recession tag could damage confidence and prompt firms to rein in spending at a time when growth is needed.
Labour leader Ed Miliband told the House of Commons that the figures were proof that the Government's plan has failed, describing the downturn as "a recession made by the Prime Minister and the Chancellor in Downing Street".
Mr Cameron responded: "These are very, very disappointing figures. Let me be absolutely clear: there is no complacency at all in this Government in dealing with what is a very tough situation which frankly has just got tougher. It is very difficult recovering from the deepest recession in living memory, accompanied as it was by a debt crisis."
He added: "We have got to rebalance our economy. We need a bigger private sector. We need more exports, more investment. This is painstaking, difficult work but we will stick to our plans, stick with low interest rates and do everything we can to boost growth, competitiveness and jobs in our country."
The current downturn is expected to be nothing like as severe as the previous recession of 2008-09, when the economy contracted by more than 7%. The ONS's first estimate is compiled before more than half of the data has been gathered and some economists are hopeful that figure will be revised higher in coming months.
Chris Williamson, chief economist at Markit, said: "The underlying strength of the economy is probably much more robust than these data suggest.
"The danger is that these gloomy data deliver a fatal blow to the fragile revival of consumer and business confidence seen so far this year, harming the recovery and even sending the country back into a real recession."