This follows six consecutive quarters of growth, including an expansion of 0.7 per cent in the previous quarter.

While manufacturing output rose 1.4 per cent compared with an increase of 1.1 per cent in the previous quarter, construction output decreased by 3.3 per cent in the fourth quarter, compared with a rise of 3.9 per cent in the previous quarter.

Dr John Philpott, chief economic adviser at the Chartered Institute of Personnel and Development (CIPD) says, ‘The latest GDP figure is astonishingly poor. Today’s figure is consistent with the CIPD’s estimate that UK unemployment will reach 2.7 million by the end of 2011.

‘If the economy continues to underperform and unemployment soars in the coming months, the government will need to make clear that it is willing to adopt a more flexible policy for cutting the fiscal deficit.’

John Walker, national chairman of the Federation of Small Businesses, also fears government action is needed to avoid another downturn. ‘The coalition government has been dominated by a relentless focus on cuts,’ says Walker. ‘While other countries have cut VAT, particularly in sensitive areas such as construction, the UK government has increased it.

‘As a double-dip recession comes ever closer, we need to see the government look to ways to nurture entrepreneurship and allow small firms to grow.’