UK GDP growth slows to 0.2 pc

In the first three months of the year the GDP grew 0.5% after a 0.5% contraction in the last three months of 2010.

The ONS said growth had been slowed by one-off factors such as the Royal Wedding, warm weather and the effects of the Japanese earthquake and tsunami.

Chancellor George Osborne said: “The positive news is that the British economy is continuing to grow and is creating jobs.

“And it is positive news too that in a time of real international instability we are a safe haven in the storm.”

Nick Pearce, director of the Institute for Public Policy Research, said: “The UK economy might as well still be in recession, even if technically it isn’t.

“Outside of London in particular, the recession continues to be felt.”

Ian McCafferty, chief economic adviser at the Confederation of British Industry, said: “This is the third consecutive quarter in which special factors, such as the winter weather, unseasonal North Sea maintenance, the Japanese tsunami and an extra bank holiday, have made interpretation of the data more difficult and have depressed economic activity over the short term.

“There is likely to be some bounce back over the autumn, but it’s clear that the underlying economic recovery remains fragile and difficult.”

Brian Johnson, an insolvency partner at HW Fisher & Company chartered accountants, said: "For macro, read micro. Much of the macro-economic stagnation we're experiencing begins at the micro level, with the beleaguered SME.

"The economy has once again avoided the ignominy of a contraction - just. But with growth slowing to almost negligible levels, we are left with the grim reality of an economy that has essentially been stagnant for nine months.

"Many businesses, particularly in the struggling SME sector, are locked in a moribund embrace with anxious consumers. Both constantly expect things to get worse and, lo and behold, things do get worse.

"Consumer confidence has fallen off a cliff as people fear for their jobs and fret about interest rate rises. SMEs worry that consumers aren't spending and that public spending cuts are on the way; so they're cutting back on spending and hiring.

"With the government committed to public sector cuts and no money for further stimulus, this augurs very badly for future growth."