Second phase of recession 'likely'
Double-dip recession fears continue to stalk the UK after more grim updates showed an economy stagnating and a consumer shorn of confidence.
Economic growth in the first two quarters of the year was weaker than first thought, the Office for National Statistics (ONS) said, while retailer Mothercare and airline Flybe issued profit warnings.
The ONS revealed the country was in a much worse position at the start of the recovery than previously assumed as the 2008-09 recession was much deeper than originally feared.
The troubling data will pile pressure on the Bank of England which will reveal the outcome of its policy meeting on Wednesday, in particular whether to roll out further emergency measures to jump-start the flagging recovery.
Some economists warned a renewed recession was now more likely but the Treasury said it would not alter its deficit-busting austerity measures despite the bleaker picture.
Howard Archer, chief UK and European economist at IHS Global Insight, said: "The adjustments to the GDP history do not change the current situation which is of an economy struggling for growth in the face of major domestic and international headwinds."
Gross domestic product grew 0.1% between April and June, compared with an earlier estimate of 0.2%, while the first quarter was downgraded to 0.4% from 0.5%, the ONS said.
The revisions to GDP follow an annual rebalancing of accounts known as the Blue Book exercise which involves changes to methodology. The revisions revealed the UK suffered a much deeper recession in 2008 than previously thought. The UK economy shrank 1.3%, 2% and 2.3% in the final three quarters of 2008, compared with previous estimates of 0.3%, 0.9% and 2.1%.
However, the emergence from recession in 2009 was slightly better than first estimated, with declines of 2.2% and 0.8% in the first two quarters being revised up to 1.6% and 0.2%, and the third quarter now showing 0.2% growth, compared with a 0.3% fall.
Shadow chancellor Ed Balls said the figures showed the economy had been stagnating since the autumn - well before the current eurozone crisis. "They should set alarm bells ringing in Downing Street and the Treasury," he said.