Official figures have confirmed earlier estimates that the UK economy shrank by 0.2% in the fourth quarter of last year.
Consumer spending was higher and there was strong export growth, but businesses slashed investment.
The Office for National Statistics also said the economy grew by 0.7% on the year - a slight downward revision.
Consumer spending rose by 0.5% on the quarter - the first quarterly increase in 18 months - while exports jumped 2.3%. But gross fixed capital formation dropped by 2.8%, with business investment falling 5.6% on the quarter.
Most analysts now reckon Britain will just about avoid another recession and that growth will slowly pick up through this year after business surveys and market confidence pointed to an improvement at the start of 2012.
Bank of England Governor Mervyn King has said that quarterly growth this year will probably "zigzag" due to an extra public holiday, with a quarter of contraction likely.
