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The economy fell at a much sharper rate than expected in the second quarter of 2009, according to the Office for National Statistics.

Figures revealed a 5.6 per cent year-on-year contraction, with a 0.8 per cent drop for the three months to June – significantly below market expectations of 0.3 per cent.

Think tank the Centre for Economics and Business Research (cebr) said the figures suggest that Alistair Darling’s 2009 economic forecasts now appear impossible.

The Treasury predicted that the economy would contract by between 3.25 per cent and 3.75 per cent in 2009, with signs of growth in the first half of 2010.

But cebr said there would need to be a remarkable bounce in the second half of the year with growth of around 1.5 per cent in each quarter for this to happen.

David Kern, chief economist at the British Chambers of Commerce, says: ‘On the basis of these figures, the UK recession is almost as bad as that of the early 1980s. June’s positive retail sales were more than offset by declines in other areas of the economy.

‘There is no room for complacency and suggestions of suspending quantitative easing are misguided. It is important to persevere with an aggressive policy stimulus to ensure that the economic downturn does not worsen.’

Earlier this month inflation fell below the Bank of England’s target rate of two per cent for the first time since 2007.

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