A dire month for manufacturers after output slid by 1.5 percent during a snow-hit January deepened the UK's triple-dip recession fears Tuesday.
The latest gloomy figures from the Office for National Statistics (ONS) put further pressure on the pound, which declined to a new two-and-a-half-year low of 1.48 against the US dollar.
The UK economy contracted by a worse-than-expected 0.3 percent at the end of 2012 and will return to recession with another decline in the current quarter, economists said.
They said: "January's figures do little to ease fears that GDP may still be contracting and that the economy could therefore be in a triple-dip recession." The manufacturing decline, which followed signs of improvement in December, meant overall industrial output dropped by 1.2percent in January, dashing hopes for a better performance over the month.
Other factors behind the fall included the closure of the Schiehallion oil platform, off Scotland, which drove a 4.3percent slide in oil and gas output, the economists pointed out.
While it is still possible that the services sector could rescue the UK economy in this quarter, the figures increase the pressure on the Bank of England to boost stimulus measures next month.
Most experts believe there will be more quantitative easing, printing money, this spring with interest rates at a record low for another two years.
Further signs that UK exporters are finding life tough emerged in separate figures on the UK's trade and goods deficit, which narrowed to 2.4 billion pounds in January from 2.8 billion pounds the previous month.
Total exports in goods decreased by 900 million pounds or 3.5 percent to 24.
4 billion pounds, while lower consumption meant total imports fell by 1.4 billion pounds or 4.2 percent to 32.6 billion pounds.