Recession deepens as British economy shrinks for third straight quarter The figures are expected to show a sharp fall in construction output, shrinking industrial output, and little if any growth in the services sector. Details of spending will be published in later estimates once the ONS has collated additional data. Some economists believe the economy shrank more sharply than the consensus view of 0.2pc. We are particularly nervous about the UK figure. We are forecasting that GDP declined by 0.4pc over the second quarter and, if anything, we judge that the risks lie to the downside," said Philip Shaw, economist at Investec. Economists are confident that the second half of the year will prove more positive, with the third quarter boosted by the Olympics and a rebound from the "Jubilee effect" in the second half. Even so, Treasury officials are expecting the economy to be flat over this year as a whole. The International Monetary Fund slashed its UK growth forecasts by 0.6 percentage for both 2012 and 2013 this week, to 0.2pc and 1.4pc respectively. It was the biggest downgrade of any major economy. The Bank of England is likely to follow suit next month, when it updates its growth forecasts alongside the August Inflation Report. Minutes from the July meeting of the Bank's Monetary Policy Committee revealed the committee is considering a further interest rate cut to try and boost the economy. It would be the first move in interest rates since they were cut to an all-time low of 0.5pc in March 2009. It's a realisation that things have got worse. It's a kitchen sink approach. It smacks a little bit of panic," said Sam Hill, a fixed income strategist at RBC Capital Markets. The latest government borrowing data suggest the Chancellor is on course to miss its deficit cutting targets this year, and those targets were set in March against assumed growth of 0.7pc in 2012. The weaker growth outlook since then threaten to put targets even further out of reach. "This level of growth is not consistent with hitting the fiscal targets," Mr Hill said.