Recession deeper than expected

The double-dip recession is deeper than originally feared as revised figures have shown a sharper decline in the economy in the final quarter of last year.

Gross domestic product (GDP) shrank by 0.4% between October and December, compared with a previous estimate of 0.3%, while the economy contracted by an unchanged 0.3% in the first quarter of this year, the Office for National Statistics (ONS) said.

The figures mean the current recession - defined as two or more quarters of declining GDP in a row - is more severe than first thought. The impact of the weak economy was underlined by household spending figures, which showed expenditure falling by 0.1% compared with a previous estimate of 0.1% growth.

The downward revision will heap more pressure on the Government and fuel criticism that Chancellor George Osborne's austerity measures are choking off the recovery.

And in a further sign that the Chancellor's deficit-busting plans are struggling, Government spending grew at its fastest rate in nearly seven years between January and March, the ONS said. The 1.9% surge in Government expenditure was driven by higher spending on public administration, health and defence.

TUC general secretary Brendan Barber said: "Today's figures lay bare the damage caused by the Government's austerity programme. The Chancellor has steered the UK back into a double-dip recession for the first time in 40 years, with falling living standards continuing to depress consumer spending.

"This is not how you secure an economic recovery. Continuing with self-defeating austerity is not only choking off recovery but also risks causing permanent long-term damage to the UK economy. A new plan based on investment and jobs is more vital now than ever."

Shadow chancellor Ed Balls said: "Day by day the evidence is growing that David Cameron and George Osborne's economic plan has failed and a change of course is urgently needed. The double-dip recession is even deeper than thought and, as a result, borrowing is now going up to pay for the costs of economic failure.

"And with Britain the only G20 country other than Italy in recession, the Government cannot try to blame everybody else for their own mistakes. As we warned, raising taxes and cutting spending too far and too fast would backfire.

"We now need another U-turn from the Chancellor on his failed policies that have pushed Britain into recession. If we're to get the deficit down, we need a more balanced plan and action now to boost jobs and growth. The longer the Chancellor clings on to his failing plan, the more long-term damage he risks doing to our economy."