UK economy: Recession deeper than feared as GDP revised down Published on Thursday 24 May 2012 09:57 THE state of the economy is worse than originally feared as revised figures today showed that gross domestic product (GDP) shrank by 0.3 per cent between January and March, down from a first estimate of 0.2 per cent. GDP shrank by 0.3 per cent in first three months of 2012 Construction output falls by 4.8 per cent UK in a technical recession The figures released today by the Office for National Statistics (ONS) show that the double-dip recession is deeper than first thought. The change was driven by a worse-than-previously estimated performance from the nation's builders, as construction output fell 4.8 per cent, down from a drop of 3 per cent, the steepest decline in 11 years. The second estimate, which could be revised later, means the UK is in a technical recession - defined as two quarters of decline in a row - following a 0.2 per cent fall in the final three months of 2011. Read the ONS bulletin in full (PDF) 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. It will also dash hopes that the figures could be revised upwards, possibly into positive territory, after some economists cast doubt on their accuracy. The second estimate provides data for the expenditure side of the economy for the first time and revealed a slowdown in household spending, which increased by 0.1% in the first quarter, compared to 0.4% growth in the final quarter of last year. Household spending declined for three quarters in a row last year and has been hit by high inflation, sluggish wage growth and soaring unemployment. But Government spending surged 1.6 per cent, the biggest rise since the first quarter of 2008, driven by spending on health and defence. The services sector, which accounts for some three-quarters of the economy, saw unrevised growth of 0.1 per cent, after a decline of 0.1 per cent between October and December last year. The industrial production sector declined at an unrevised 0.4 per cent, with manufacturing flat after a 0.7 per cent decline in the previous quarter. Economists and business leaders have warned that a technical recession will hit confidence and could cause businesses to rein in spending at a time when they are being encouraged to invest to stimulate growth. But the current downturn is expected to be nothing like as severe as the previous recession of 2008/09, which spanned more than a year. In another set of data, business investment rose by £1.1 billion, or 4 per cent, to £30.8 billion when compared to the previous quarter. The rise was driven by investment in electricity, gas and water, and mining and quarrying industries, the ONS said.