The UK economy contracted by a larger-than-expected 1.9% during the first three months of 2009, official figures confirmed today.
The Office for National Statistics (ONS) claims the UK's economic situation has worsened this year, after GDP fell 1.5% during the final quarter of 2008.
Sterling also dropped today, slumping 1% against the euro to €1.1087 on fears the UK may lose its AAA credit rating. Moody's, the ratings agency, has expressed concern over the scale of public debt outlined in the Budget - with Darling forecasting it will reach 79% of GDP by 2013.
On Wednesday, the Government predicted GDP would fall by 1.6% in the three months to 31 March, but the reality is even bleaker than ministers predicted.
Chancellor Alistair Darling believes the economy will shrink by 3.5% during 2009, bet believes growth will return next year. However, his predictions of 3.5% growth in 2011 have been widely criticised by economic analysts.
The International Monetary Fund (IMF) warned on Wednesday Britain would be stuck in recession for another year as consumers continue to cut spending. It predicts a 4.1% slump for the UK this year and a further 0.4% contraction next year.
However, the IMF backed up Darling's claim that Britain would suffer less than other major economies, including Germany and Japan.IFAonline
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