Recession is deeper than feared
Britain's double-dip recession is deeper than previously thought after revised estimates showed a sharper decline in the economy in the first three months of 2012.
Gross domestic product (GDP) shrank by 0.3% between January and March, down from a first estimate of 0.2%, with much of the deterioration due to a 4.8% decline in construction - the sector's steepest fall in 11 years.
Labour said the revised figures from the Office for National Statistics (ONS) showed that the coalition Government's austerity programme had failed and called on David Cameron for a change of course to boost growth and jobs.
But Treasury minister Chloe Smith insisted the Government would not be deflected from its drive to get the deficit down. "We need to stick to our path. It would not be acceptable to fail to deal with our debts," she told the BBC.
Ms Smith indicated that the most appropriate response might be for the Bank of England to print more money or cut interest rates, as the International Monetary Fund recommended in its report on the UK economy earlier this week.
The second estimate, which could be revised later, means the UK is in a technical recession - defined as two quarters of decline in a row - following a 0.2% fall in national income in the final three months of 2011.
Economists and business leaders have warned that a technical recession will hit confidence and could cause businesses to rein in spending at a time when they are being encouraged to invest to stimulate growth.
Shadow chancellor Ed Balls said that Britain's economic problems could not be blamed exclusively on the crisis in the eurozone. "This is a recession made in Downing Street by this Government's failed policies," he said.
"Despite all the problems in the euro area, France, Germany and the eurozone as a whole have so far avoided recession and only exports to other countries stopped us going into recession a year ago."
David Kern, chief economist at the British Chambers of Commerce, said: "Fundamental doubts about the accuracy of the ONS's estimates persist. Virtually every business survey has indicated positive growth in the economy in the first quarter."