Officially UK in recession

Britain has officially entered recession for the first time since 1991, after the economy shrank at the fastest pace for nearly 30 years in the fourth quarter.

The UK economy contracted by a worse-than-expected 1.5pc between October and December from the previous three months, beating the declines seen during the 1990s recession, figures from the Office for National Statistics showed today. This followed a 0.6pc slump in the third quarter. Two or more consecutive quarters of contraction are regarded as a recession.

The fall in gross domestic product (GDP) was the biggest since the second quarter of 1980, the year of the Bristol riots, the Iranian embassy siege and British Leyland's launch of the Metro.

The chancellor added that the government would take all necessary steps to help the economy recover and stressed the need for international cooperation.

The United States, Japan and Germany are also in recession.

Alan Clarke of BNP Paribas believes that the UK is not even half-way through the downturn, and predicted that GDP will continue to shrink through 2009.

"It's a case of two quarters down, four to go," Clarke said. "All the indications are that this recession is worse than the one of the early 1990s."