It's official: UK economy in recession

Official figures have confirmed that Britain is in the grip of recession, with the worst economic output figures since 1980.

Gross Domestic Product shrank by 1.5% in the last quarter of 2008 on top of a 0.6% fall the previous quarter, according to figures from the Office of National Statistics.

Earlier today, Tory leader David Cameron sparked a political row when said the UK may have to approach the IMF for financial support, suggesting he believes government policies will result in a virtually bankrupt country.

Chancellor Alistair Darling appealed for time to show his policies will work but declined to repeat his forecast of recovery later this year. He admitted the downturn "is undoubtedly sharper than many people believed."

CBI deputy director general John Cridland said the intensity and speed of falling demand and the credit crunch meant it would be more painful than the early 1990s.

The last time GDP fell by more was in 1980 when it contracted 1.8%.

The gloomy statistics has fuelled speculation that the Bank of England will next month reduce its interest rate by another 0.5 point to 1%, its lowest ever level, and could reach zero.