Britain is now officially in recession for the first time since 1991.
The Office for National Statistics says gross domestic product fell by 1.5% in the last three months of 2008 after a 0.6% drop in the previous quarter.
A recession is defined as two consecutive quarters of falling economic growth.
The BBC reports it represents the biggest consecutive quarterly decline since 1980 and a 1.8% fall on the same quarter a year ago. The contraction was worse than expected.
All elements of the economy shrank from the previous three months.
In addition, unemployment is accelerating sharply, with 1.92 million people now out of work. The housing market remains severely depressed and retail sales are weak. The Bank of England has cut interest rates to 1.5%.
Chancellor Alistair Darling said that the figures underlined the scale of the challenges the government faced.
The BBC reports the average recession in Britain since 1955 has lasted for three quarters, but the past two recessions have lasted for five.
Many forecasters believe a recession could stretch into 2010 and be as severe as that of the early 1990s.