Britain's economy shrank by more than previously thought in the third quarter and for the first time since the early 1990s, official data showed on Tuesday, raising concerns the UK is heading into a deep recession.
The Office for National Statistics said gross domestic product fell by 0.6 percent in the three months to September, revised down from a previous estimate for a 0.5 percent fall.
That was the biggest fall since 1990 and worse than analysts' forecasts for an unrevised figure. Quarterly data for the second quarter were left unrevised, showing the economy stagnated in the April-June period.
On the year, the economy grew 0.3 percent in Q3, unrevised from the previous estimate, and the weakest since 1992.
"It really does paint an exceptionally gloomy picture about the speed with which the UK economy has lapsed into recession," said Matthew Sharratt, economist at Bank of America.
"The decline we are likely to see in the fourth quarter and first quarter (2009) will be substantially worse than what we have seen in Q3."
The pound fell as investors speculated the Bank of England would have to cut interest rates much further to shore up the economy, following 3 percentage points of cuts since October.
Markets have also been speculating that, with interest rates already at 2 percent, the Bank may eventually have to resort to extraordinary measures, such as boosting money supply, to help.
Policymakers are agreed that the credit crunch is driving Britain into its first recession — defined as two consecutive quarters of negative growth — since the early 1990s.
The ONS said the downward revision to the third-quarter was due to bigger than previously estimated falls in manufacturing output and weaker services output.
The manufacturing sector shrank 1.6 percent on the quarter, the biggest fall since 2001 and the distribution, hotels and catering sector contracted 2.1 percent on the quarter, its biggest fall since 1980.
The services sector posted its biggest fall since 1990 as business services and finance output shrank 0.6 percent reversing growth of 0.5 percent in the second quarter.
Separately, the ONS released data on the balance of payments. The current account deficit widened to 7.723 billion pounds ($11.39 billion) from an upwardly revised 6.424 billion pound deficit.
