The UK economy grew by 0.5% in the first quarter of the year, down slightly on economists' forecasts, the Office for National Statistics (ONS) said in its first estimate today.
It follows a contraction of 0.5% in the final three months of last year, which followed growth of 0.7% in Q3 2010.
Ahead of today's estimate, analysts had predicted a modest growth figure of around 0.6% to 0.7%.
The pound rose more than 0.4% against the dollar to $1.6519 in trading following the announcement, whilst the yield on the benchmark two year gilt rose two basis points to 1.102%.
The FTSE was little changed, trading 15 points lower at 6,054.
Schroders describes today's figures as "very stagflationary," while Capital Economics said the UK's underlying growth remains flat.
The largest contribution to growth was from business services and finance, which increased 1%, compared with a fall of 0.8% in the previous quarter.
It added total services output increased by 0.9% in the first quarter, compared with a decrease of 0.6% in the previous three months.
Today's modest increase in GDP will fuel some economists' arguments that growth remains sluggish as the coalition's programme of cuts and tax rises begins to bite.
Earlier this month, the International Monetary Fund downgraded its growth forecast for the UK this year to 1.7%, down 0.3% from its previous prediction in January.
In the March Budget, the Office for Budget Responsibility said GDP will rise just 1.7% this year, rather than the 2.1% it predicted in November.
Today's figures - which are subject to being revised - will be keenly observed by the Bank's Monetary Policy Committee which has indicated its decision to hold rates at their historical lows of 0.5% has largely been driven over fears the economic recovery remains shaky.
But today's modest increase in output is unlikely to trigger a fundamental change in sentiment on the committee, which in April voted six-three against a hike in rates.
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