After Gordon Brown and Mervyn King, the Governor of the Bank of England, finally admitted earlier this week that Britain was entering its first recession since the early Nineties, confirmation that this fate is now inevitable arrived this morning with a bang.

Today’s GDP figures could hardly have been more dire. The economy not only shrank over the past quarter for the first time in 16 years — as almost everyone had expected that it would — but it did so in spades, contracting at an alarmingly rapid rate of 0.5 per cent. This marked its steepest decline since the end of 1990, on the heels of zero growth in the second quarter.

Although formal confirmation of recession will technically now await figures showing a further contraction in the present quarter, there can be no doubt after today’s bleak numbers that this will soon follow.

Every sector of the UK economy with the exception of agriculture is now shrinking and the scale of this broad-based downturn looks increasingly nasty.

It remains possible that Britain will be able to avoid the new recession becoming as protracted and painful as that of the early Nineties. But today’s figures were bad enough to suggest that this will require a very large dose of luck. Indeed, the danger is that the economy could plunge on a scale similar to, or worse than, the more brutal early Eighties recession.

The dire straits of the services sector, accounting for three-quarters of GDP, that were revealed today are especially ominous. Services shrank at the fastest pace in 18 years — 0.4 per cent, led by the consumer dependent retail, wholesale, hotels and restaurants sector, which slumped by a drastic 1.7 per cent.

It seems probable that the economy will now slide into a steep, consumer-driven downturn. With little to induce fretful consumers to stop their retreat from shops, incomes having endured a severe squeeze from soaring living costs offset by only modest pay rises, and credit remaining scarce and costly, a consumer bust to follow the consumer boom that, in reality, ended some time back, seems a certainty.

The National Institute of Economic and Social Research expects that consumer spending will slump by more than 3 per cent next year, and that Britain will suffer the worst recession of any leading economy.

Urgent and swift action by the Government and the Bank of England, through steep tax cuts and a rapid boost to public spending, retain the power to limit the ultimate scale of the recession we are now entering. But it is now too late to prevent this being a painful, and probably prolonged, experience.

It is going to hurt and it is time for us all to grit our teeth and brace for the worst that is yet to come.

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