UK first-quarter growth revised downwards Britain's economy is in a deeper double-dip recession than first thought after the official output estimate for the first quarter was revised from a contraction of 0.2 per cent to 0.3 per cent. The Office for National Statistics reduced its second estimate of gross domestic product because construction output fell 4.8 per cent in the first quarter, more than the first estimate. Manufacturing output was flat and the output of the dominant services sector rose an anaemic 0.1 per cent. "Obviously this is a disappointing outcome, and confirms that the UK economy is in recession," said Alan Clarke, an economist at Scotia Capital. It nonetheless does stand at odds with labour data that show a very decent pace of improvement. The UK's economic recovery petered out about 18 months ago and - with the data getting worse rather than better this year - fierce debate has erupted over the coalition government's austerity programme. However, some economists maintain the official GDP data looks too pessimistic. David Tinsley, an economist at BNP Paribas, said: "The underlying picture is probably stronger than the headline ONS data suggest ... both because surveys are more positive and also because final domestic demand is showing some growth. The problem is that just as the domestic side of the UK economy is firming up it is being hit by very significant external shocks [from the eurozone]. In its second estimate, the ONS calculates GDP based on expenditure and income measures. It estimated household consumption expenditure rose just 0.1 per cent in the first quarter, compared with an increase of 0.4 per cent in the previous quarter. Household expenditure was slightly lower than the same period a year ago, underlining the squeeze on people's real incomes amid high inflation and weak wage growth. Meanwhile, government final consumption expenditure picked up unexpectedly: it rose 1.6 per cent in the first quarter compared with an increase of 0.5 per cent in the previous quarter. There was mixed news on the two parts of the economy most likely to eventually power the recovery: business investment and net trade. The net trade deficit increased slightly in the first quarter, but business investment rose 3.6 per cent from the previous quarter, suggesting companies might finally have started to spend some of their cash. Vicky Redwood, an economist at Capital Economics, also pointed out that a run down in inventories knocked 0.7 per cent from quarterly growth. "This should just be a temporary drag," she said. Mr Clarke of Scotia Capital went further. At some point when the level of inventories stabilises (let alone adjusts higher) there will be a whopping great addition to growth. However, that is several months off yet and there is obviously a danger that the situation gets worse before it gets better. The Bank of England called a halt this month to its efforts to stimulate the economy through so-called quantitative easing as its fears about persistent inflation - which was 3 per cent last month - trumped its concern about the lack of economic growth. However, this week the International Monetary Fund urged it to cut interest rates from 0.5 per cent and resume QE to try to support the economy at a time of fiscal consolidation.