Decline of the UK economy worsens

The UK economy shrank 1.9% in the first three months of 2009, according to gross domestic product (GDP) data from the Office for National Statistics.

The figure was much worse than the expected decline of about 1.5% and followed a contraction of 1.6% in the previous three-month period.

Taken together, it was the worst six-month decline in GDP since the ONS began publishing the figures.

GDP measures the value of all the goods and services produced by a country.

'Weakness to come'

The contraction in the January to March period was the biggest three-month decline in GDP since the third quarter of 1979.

The ONS figures also showed that GDP for the year to the end of March was down by 4.1%.

The latest figures mean that GDP has now shrunk for three quarters in a row, and confirm that the economy is still deep in recession.

The biggest contributor to the decline was the manufacturing sector, which shrank by 6.2% in the first three months of the year, having decreased by 4.9% in the previous quarter.

"The last six months has seen the sharpest fall [in GDP] on record and the manufacturing number... is a record," Jon Beadle from the Office for National Statistics (ONS) told the BBC.

Only two sectors managed any growth at all: government output and the agriculture, forestry and fishing sector, both grew 0.3% in the period.

Analysts suggested that this would be the worst contraction in the current recession.

"I very much doubt that GDP is going to contract at these sort of rates for any longer, but I do think it will still contract all throughout 2009," said George Buckley at Deutsche Bank.

"So there's still a lot of weakness to come, but not as weak as we're seeing today."

Gloomy forecasts

The worse-than-expected figure casts doubt on the chancellor's prediction that GDP for the whole of 2009 would only shrink by 3.5%.

"A contraction of at least 4% is much more likely," said Benjamin Williamson at the Centre for Economic and Business Research.

"Our latest forecast is for a 4.5% contraction this year, making 2009 the steepest single year contraction in economic activity since the 5.1% fall in 1931."

But Chief Secretary to the Treasury Yvette Cooper said the government stood by its forecasts.

"We believe the economy will start to recover towards the end of this year," she told the BBC.

The International Monetary Funds predicted a 4.1% decline for 2009.

The ONS cautioned that the GDP figure was only its preliminary estimate and could be revised.

There was some better News for the economy in the latest retail sales figures.

Retail sales unexpectedly rose 0.3% in March, making them 1.5% above the level seen in March 2008.