Warned: George Osborne has been told Britain is in the midst of a double-dip recession, heaping more pressure on the Chancellor after controversy over his tax on hot takeaway food and a fuel duty rise
The Organisation for Economic Cooperation and Development said output fell by 0.1 per cent in the first three months of 2012, having dropped by 0.3 per cent in the final quarter of 2011.
If official figures next month from the Office for National Statistics back up the respected think-tank’s findings, it will be the first double-dip recession in Britain since 1975.
The gloomy verdict – from such a highly respected think tank – is a bitter blow for the Chancellor just seven days after his much-maligned 'pasty tax' announced in the Budget.
The Paris-based OECD is a long-time supporter of the Chancellor's battle to repair the economic and financial damage of the Labour years.
But its view that the UK is in the midst of a double-dip recession will be seized on by Labour as evidence that even Mr Osborne's most loyal supporters do not think his plan is working.
Mr Osbourne is already under fire for his controversial tax on takeaway food and a planned rise in fuel duty.
Petrol stations have begun rationing fuel before the rise kicks in and the Army is on standby after ministers were accused of spreading panic.
Retailers such as pasty-maker Greggs have also been up in arms about the planned rise in VAT on hot snacks, depending on their 'ambient temperature', from October.
Now bakers and food chains are planning to mobilise angry pasty fans to block the new levy.
In its report, the OECD also warned the recovery for the world's biggest economies would be fragile, with the outlook for Europe 'very weak'.