New figures show that Britain is officially in recession for the first time since 1991 after its economy shrank during the final two quarters of last year.
The Office for National Statistics said that British gross domestic product (GDP) shrank by 1.5% in the fourth quarter of 2008 from the previous three-month period, when it also contracted.
The generally-used technical definition of a recession is two quarters running of negative economic growth.
The 1.5% quarterly contraction was the worst performance in more than 28 years.
Separate figures showed that UK retail sales defied expectations again last month with a surprise 1.6% rise for the Christmas period.
But the ONS said the value of sales fell 0.8% compared with last year, the worst performance since records began in 1986.
The slump was driven by predominantly non-food stores as high street retailers slashed prices. Volumes were up between November and December, driven by higher sales of household goods.
Analysts had expected a seasonally-adjusted fall of between 0.5% and 0.8% from retailers after survey data over the Christmas period suggested Britain's high street had suffered a severe slump.
