Hopes that Britain had climbed out of recession were dashed again today when the Office for National Statistics (ONS) confirmed that the country is still in a slump.

Revised national output figures showed that the economy contracted by 0.3 per cent between July and September, above initial estimates of a 0.4 per cent decline in the third quarter.

The figure is a blow to hopes that the ONS's initial figures were drastically wrong, after economists questioned the reliability of the preliminary estimates last month.

Today's slightly higher reading is in line with their forecasts, but some analysts said that the data could eventually be revised up much more. The ONS will publish more detailed gross domestic product (GDP) figures next month, when it could revise the headline rate again.

The ONS was quick to defend the reliability of its data, and today highlighted how the average revision between the initial estimate and the final GDP figure is about 0.05 per cent.

The more detailed GDP figures published today showed that there was a further sharp running down of stocks, which should help the economy going forward as companies start to replenish their warehouses. Consumer spending also stabilised after falling for the previous five quarters.

However, Colin Ellis, European economist for Daiwa Securities said that the figure was bolstered by government intervention.

Mr Ellis said: "Consumption was unchanged … despite a strong increase in car spending — implying that, without the Government's car scrappage scheme, household spending would have fallen again in the third quarter."

The pace of decline in business investment also eased. However, net trade helped to drag down the overall growth in GDP, contributing 0.2 percentage points to the 0.3 per cent decline.

There were glimmers of hope as the data showed that the dominant services sector, which accounts for about 75 per cent of the country's output, contracted by less than initially thought, falling by 0.1 per cent, after a 0.6 per cent decline in the previous quarter.

However, industrial production and construction slumped by 0.8 per cent and 1.1 per cent, respectively.

Howard Archer, chief UK and European economist for IHS Global Insight, said that he expected the economy to emerge from recession in the final three months of the year. "Latest data and survey evidence point clearly to the economy finally returning to growth in the fourth quarter, and we suspect the economy could well expand by around 0.5 per cent quarter-on-quarter," Mr Archer said.

However, Mr Ellis cast doubt on the sustainability of any recovery. "Overall, while today's data are mildly encouraging, in the sense that the fall in GDP is now thought to be a little smaller, they still point to serious doubts about the strength and durability of any future recovery in the UK economy," he said.

This will come as a blow for Alistair Darling, the Chancellor, who will have been hoping for some more positive economic news with which to introduce his Pre-Budget Report next month.

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