Recession looms as economy shrinks
The downturn marks the first quarter of negative growth for 16 years. If it continues for a second quarter the country will be officially in recession.
The FTSE 100 Index fell sharply in the wake of the worse-than-expected figures. Sterling also fell to a fresh five-year low of 1.56 against the US dollar.
Tory leader David Cameron said: "This is the day the recession became real. We've had ten years of being told: 'No more boom and bust', ten years of a Government not putting aside money for a rainy day. Well that rainy day has now come."
Business and union leaders have called for urgent measures to boost the economy and stop the recession getting worse.
David Kern, economic adviser to the British Chambers of Commerce, said: "All areas of the economy recorded declines. But, the declines in services and construction were even larger than most analysts predicted."
He added: "The economic outlook is serious. While it is important not to talk ourselves into a slump, urgent steps are needed to alleviate the worst consequences.
"Interest rates will have to be cut without delay to 4 per cent in November, and to 3.5 per cent shortly afterwards. Business taxes will have to be cut in the Pre-Budget Report, and the government will have to insist that the vital flow of bank finance to small firms is maintained."
TUC general secretary Brendan Barber said: "The Government must now give the same commitment to fighting recession as they have done to saving the banking system." (UK news, yahoo website, 24/10/2008)