Britain's Office of National Statistics said the gross domestic product fell 0.7 percent in the second quarter compared to the first three months of the year.
The figure is considered a preliminary estimate that could change as more data becomes available. As of Tuesday, however, the figure was far lower than expected. Economists had predicted a drop of 0.2 percent.
Compared to the second quarter of 2011, the GDP is down 0.8 percent, the data office said.
That is also below expectations. The forecast had called for a 12-month drop of 0.3 percent.
Output from British manufacturing dropped 1.3 percent in the quarter from the first quarter after a drop of 0.5 percent from the fourth quarter of 2011 to the first quarter of 2012.
The ONS said construction output fell 5.2 percent from quarter to quarter following a decline of 4.9 percent from the fourth quarter of 2011 to the first three months of 2012.
Output from service industries fell 0.1 percent compared to the first quarter, following a 0.2 percent gain from the fourth quarter of 2011 to the first quarter of 2011.
The British economy last grew in the third quarter of 2011, when it rose 0.5 percent.