The UK economy shrank by 0.7 per cent in the months from April to June, preliminary figures from the Office for National Statistics (ONS) have shown.
It marks the third successive quarter of contraction, following a 0.3 per cent drop in the first three months of the year and a 0.4 per cent decrease in the final quarter of 2011, pushing the economy deeper into recession.
The unexpected drop is larger than most economists had predicted and is the sharpest fall since early 2009.
According to ONS data, the fall largely came from the construction sector, which shrank by 5.2 per cent - also the largest drop since the first quarter of 2009. Output from both the agricultural and production sectors also decreased by 2.6 per cent and 1.3 per cent respectively.
It said the additional Jubilee bank holiday and prolonged wet weather were likely to have affected performance. Continuing austerity measures and the eurozone crisis have also held back economic growth.
In a statement to the press, Chancellor George Osborne said: "We're dealing with our debts at home and the debt crisis abroad. We've made progress over the last two years in cutting the deficit by 25 per cent and businesses have created over 800,000 new jobs."
"But given what's happening in the world we need a relentless focus on the economy and recent announcements on infrastructure and lending show that's exactly what we're doing."
Last week the International Monetary Fund (IMF) cut Britain's economic growth forecast for this year to 0.2 per cent, saying the country's outlook had deteriorated faster than any other major advanced economy. It said that monetary policy needs to respond 'effectively' with 'unconventional measures.'
Business groups maintained that the figures painted an unduly pessimistic state of the economy.
Director general of the British Chambers of Commerce (BCC) John Longworth said: "While many firms are faring better than official statistics may suggest, it's time for the government to be bold and show leadership."
John Cridland, director general of the Confederation of British Industry (CBI) called the figures 'disappointing'.
"When I talk to businesses on the ground, however, the overwhelming view is that right now the economy is flat rather than negative, and there is potential for Britain to get back into growth later in the year."
Today's figures are a preliminary estimate based on 44 per cent of the total information used and are subject to a further two revisions in the coming months.