Britain's economy contracted by 0.3% in the first three months of the year, faster than previously thought the Office for National Statistics (ONS) have said.
George Osborne will now face increasing pressure to explain how the coalition plans to drag the country out of recession.
The ONS said the downturn in the construction sector between January and March was even more pronounced than it had initially projected, pushing its overall measure of GDP growth down to -0.3%, from a first estimate of -0.2%.
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The downturn was of the same magnitude as the contraction in the final quarter of 2011, undermining hopes that the economy was moving towards recovery.
"Over the past eighteen months, the economy has experienced a mild contraction in output. This reflects global economic headwinds as well as domestic economic conditions such as the impact of continuing high rates of inflation in the UK," the ONS said.
Deputy Prime Minister Nick Clegg suggested earlier this week that the coalition plans to expand its policy of credit easing, using government guarantees to kickstart spending on infrastructure and housing to boost the economy.