There are negative drags in particular problems in the banking sector,' he said.

But Hetal Mehta, senior economic advisor to the Ernst & Young ITEM Club, the British economic forecasting group, said: 'With credit still severely restricted, consumers and businesses continuing to retrench and world trade yet to pick up, it is hard to see any grounds for sustained optimism at the moment.'

The GDP fall was put down to shrinking business services and finances.

'We're past the worst, but we're not heading for a boom,' said Alan Clarke, an economist at BNP Paribas, the European banking and financial group.