Britain's recession deeper than expected - Ninemsn

Britain's recession is deeper than first thought, according to revised official figures that show the economy of the non-eurozone nation shrank 0.3 per cent in the first quarter.

A second estimate of gross domestic product (GDP) for the January-March period compared with an initial reading of minus 0.2 per cent, the Office for National Statistics (ONS) said in a statement on Thursday. Analysts had forecast no change.

The British economy is in recession, defined as two successive quarters of contraction, after it also shrank 0.3 per cent in the last three months of 2011.

"Today's release is bad news for UK policymakers as it shows the economy faring even more badly than initially thought," said economist Scott Corfe at the Centre for Economics and Business Research, an independent consultancy.

"Indeed, the latest data show the UK economy performing worse than the eurozone economy, which saw zero growth at the start of the year - meaning the UK's woes cannot even be fully attributable to the debt crisis embroiling the continent."

Prime Minister David Cameron's spokesman insisted it was difficult for the British economy to grow when much of Europe was struggling amid the debt crisis.

"What the figure confirms is that it is a very difficult economic situation and we will take time to recover from the biggest financial and debt crisis in our lifetimes.

"We have always made clear ... that if the rest of Europe doesn't grow it would prove hard to avoid a recession here in the UK. We cannot be immune from what is happening on our doorstep," the spokesman said.

The main opposition Labour party argues that the economy has been harmed by the coalition government's austerity drive.

The International Monetary Fund warned this week that the government should be ready to cut taxes and increase infrastructure spending if needed, while also praising the policy of heavy spending cuts.

The IMF, which predicts the economy will return to modest growth in the second half of this year provided Europe's crisis eases, added that the Bank of England should consider cutting further its already record-low interest rates.

On Thursday, the ONS also reported a slowdown in household spending, which increased by just 0.1 per cent in the first quarter, compared with 0.4-per cent growth in the final three months of last year.

However, government spending surged by 1.6 per cent in the biggest increase since the first quarter of 2008, lifted by spending on health and defence.