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UK economy shrinks 1.9% in Q1

BRITAIN'S economy shrank more at its sharpest rate in 30 years in the first three months of 2009, official data showed today, suggesting the recession may be deeper than feared.

The Office for National Statistics said gross domestic product fell 1.9 percent on the quarter in the first three months of this year, the biggest fall since Q3 1979 and below forecasts for a 1.5 percent contraction.

Most analysts had expected the 1.6 percent fall seen at the end of last year to mark the worst period of the recession.

On the year, GDP fell by 4.1 percent, the biggest annual drop since the end of 1980. Analysts had expected a 3.8 percent contraction.

The figures suggest there are downside risks to finance minister Alistair Darling's forecast for a 3.5 percent contraction this year -- he had expected Q1 GDP figures to show a similar drop to Q4.

Today's data also suggest policymakers may need to do more to kick-start the economy, having already slashed interest rates to a record low of 0.5 percent and started buying assets with newly created money.

The government has also pumped more than 20 billion pounds into the economy.

The ONS data showed the biggest quarterly fall in manufacturing output since records began in 1948 and the biggest quarterly fall in services output since 1979.

Business services and finance recorded its biggest drop in output since records began in 1983.

Separate data showed an unexpected rise in retail sales on the month in March driven by strength in clothing and food sales.


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