The UK returned to recession after a 0.2% fall in GDP in the first quarter of 2012, the Office for National Statistics said on Wednesday.
The decline in gross domestic product (GDP) was driven by the biggest fall in construction output for three years, while the manufacturing sector failed to return to growth, the ONS said.
The preliminary estimate, which may be revised later, means the UK is back in a technical recession - defined as two quarters of decline in a row.
The City had predicted the economy would scrape growth of 0.1% after a 0.3% fall in the previous quarter.
Reacting to the news Chancellor George Osborne said Britain was in a "very tough economic situation."
“It’s taking longer than anyone hoped to recover from the biggest debt crisis of our lifetime – even after the recent fall in unemployment. But over many years this country built up massive debts, which we are having to pay off. It’s made much harder when so much of the rest of Europe is in recession or heading into it.
"The one thing that would make the situation even worse would be to abandon our credible plan and deliberately add more borrowing and even more debt.“
TUC General Secretary Brendan Barber said the situation was "worse than expected".
“Austerity isn’t working. The government should look across the Atlantic and follow President Obama’s alternative that has reduced unemployment and brought growth back to the USA.”
Dave Prentis, general secretary of Unison, also called for the government to look to the US for answers amid the economic crisis.
“Instead of looking to austerity Europe, the government must turn its head to America where public spending has returned the economy to growth. Every day that the coalition government fails to act is another day that communities and hardworking families suffer unnecessarily.”
However the current downturn is not expected to be as severe as the previous recession of 2008/09, which spanned more than a year.
Earlier the British Chambers of Commerce (BCC) said a return to recession could harm business.
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BCC director general John Longworth said: "A negative first-quarter figure, however small, will mean the economy has entered a technical recession and this could affect the sentiment among businesses."
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PA/The Huffington Post UK | Posted: 25/04/2012 09:31 Updated: 25/04/2012 10:13