Britain was back in recession on Wednesday after the economy shrank again in the first quarter but the government insisted on sticking by its deep spending cuts despite concerns they undermine growth.
Britain's gross domestic product (GDP) contracted 0.2 percent between January and March, following a fall of 0.3 percent in the fourth quarter of 2011, the Office for National Statistics said.
A recession is defined as two successive quarters of GDP contraction.
"We are in a difficult economic situation in Britain," Prime Minister David Cameron said in reaction to the data.
"Just as you see now recessions in Denmark, in Holland, in Italy, in Spain, that is what is happening in the continent that we trade with. What is absolutely essential is we take every step we can to help our economy out of recession," Cameron told parliament.
The economy has taken a major hit from weak output in the construction and manufacturing sectors, as well as from deep government spending cutbacks and fallout from the debt crisis in key trading partner the eurozone.
Britain's Conservative-Liberal Democrat coalition has implemented huge cuts to public spending and raised taxes in a bid to slash a record deficit inherited from the previous Labour government in 2010.
Labour leader Ed Miliband on Wednesday accused the coalition of implementing a "catastrophic economic policy," adding that it was Cameron's "plan for austerity, his cutting too far and too fast, that has landed us back in recession."
Cameron insisted that such austerity was vital to keep state borrowing costs low, preserve Britain's top AAA credit rating and avoid a sovereign debt crisis that has crippled the eurozone, of which Britain is not a member.
"More borrowing, more spending more debt, that is what caused these problems. It cannot be the solution to these problems," the Conservative party leader insisted.
"We must not put at risk the low interest rates that are absolutely essential to our recovery ... These are difficult decisions to get on top of debt and public spending but they are the right decisions," he added.
Highlighting the extent of Britain's own debt strains, official data on Tuesday showed public sector net debt as a percentage of GDP -- excluding the cost of bank bailouts -- hit a record high 66 percent in March.
Britain's total debt stands at £1.022 trillion (1.25 trillion euros, $1.65 trillion).
Wednesday's GDP figures meanwhile confounded most analysts' expectations for growth of 0.1 percent in the first quarter after retail sales rebounded a strong 1.8 percent in March from February.
"Today's preliminary data showed a small decline in GDP of 0.2 percent in the first quarter of 2012, implying a mild technical recession," said John Hawksworth, chief economist at accountancy group PricewaterhouseCoopers.
"However, these are only very preliminary data and there are reasons to believe that they could ultimately be revised up."
Britain's economy clawed its way out of a record-length recession in the third quarter of 2009 following a downturn sparked by the global financial crisis but never managed to post a solid recovery.
To help Britain exit its last recession, the Bank of England slashed its main interest rate to the current record-low 0.5 percent in March 2009, when it also embarked upon Quantitative Easing.
Under QE, the central bank creates new cash that is used to purchase assets such as government and corporate bonds in the hope of boosting lending by retail banks and in turn growing the economy.
The Bank of England has pumped £325 billion into the economy since beginning the stimulus programme more than three years ago.
Source: AFP European Edition