Recession deeper than thought, new statistics reveal

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 (Getty Images)

Britain's recession is even deeper than was thought, according to the latest data from the Office for National Statistics. Economic output in the first three months of this year contracted by 0.3 per cent, the agency said yesterday – more than than the 0.2 per cent reduction it estimated in April.

The news heaps more pressure on the Coalition over its handling of the economy and increases the likelihood that the Bank of England will approve more money printing in the coming months to boost demand. The UK sank into its first double-dip recession since the 1970s last month when the ONS estimated the economy shrank in the first quarter, following a 0.3 per cent contraction in the final three months of 2011.

Further grim economic news came yesterday from the Department for Education, which said the number of young people aged between 16 and 24 now considered "Neet" – not in enducation, employment, or training – rose to 954,000 in the first quarter of the year, up from 925,000 in the first quarter of 2011. The figures also show that the numbers of 16-18-year-olds alone who are considered Neet are rising again. In total, 183,000 were out of education and work in the first quarter of this year, compared to 159,000 for the same period in 2011.

The Treasury minister, Chloe Smith, rejected calls for the Chancellor to slow down the planned spending cuts. "We need to stick to our path. It would not be acceptable to fail to deal with our debts," she said

Yesterday's downward revision was prompted by a larger than realised fall in output in the construction sector. The ONS said building activity shrank by 4.8 per cent over the first three months of the year. Central government spending on building projects fell by 13 per cent in 2011 and is scheduled to fall by a further 5 per cent this year.

The second estimate of GDP showed that consumer spending rose by just 0.1 per cent over the quarter and that manufacturing output was flat. Despite the Government's austerity drive, government expenditure rose by 1.6 per cent, which the ONS said reflected an expansion of the defence and health sectors.