'UK back in recession' - think-tank

The UK has slipped back into recession after the economy contracted in the first quarter of 2012, an influential think-tank has warned.

Gross domestic product (GDP) - a broad measure for the total economy - is on course to have fallen by about 0.1% in the three months to the end of March, the Organisation for Economic Co-operation and Development (OECD) said.

The gloomy forecast comes after official figures revealed the economy contracted by 0.3% in the final quarter of 2011, which was worse than the previous estimate of a 0.2% fall.

A decline in the first three months of 2012 will mean the UK is officially back in recession, which is defined as two quarters in a row of declines.

The OECD also warned the recovery for the world's biggest economies would be fragile, with the outlook for Europe "very weak". The worse than previously thought contraction in the UK in the final quarter of 2011 meant the economy entered 2012 in a worse position than previously thought.

But economists are divided as to whether GDP will fall in the first quarter of the year. A number of upbeat surveys have suggested a return to mild growth in the quarter.

And any slump would be modest compared with the 2008/09 recession and the OECD predicts a return to growth in the second quarter of the year.

The Office for National Statistics said the powerhouse services sector grew by 0.2% between December and January, after a slight decline in the final quarter of 2011.

However, it is generally agreed that the UK's economic growth will be feeble for the first half of 2012 at least, although falling inflation should increasingly deliver a boost to consumer spending as the year progresses.

The Government's independent forecaster, the Office for Budget Responsibility, predicts the UK will avoid a recession but the economy will grow by just 0.8% over the course of 2012.