The Chancellor and the ONS were both quick to blame the surprise contraction, which spectacularly missed estimates of 0.5% growth, on the inhospitably cold weather throughout December.

However, according to ONS estimates, the cold snap likely contributed to "most of the 0.5% decline", meaning GDP would have been stagnant at best, which still would have been 0.5% down on the predicted figure.

The poor performance has sparked fears that the UK could be headed back into recession (defined as two consecutive quarters of declining GDP), or a period of stagflation, where stagnant growth combined with soaring inflation leaves policy setters unable to tackle one without adversely impacting the other.

Nicholas Mockett, partner at Moorgate Capital, said: "Unfortunately the economy is still in a very precarious position so it's no surprise that there will be difficult quarters.

"Hopefully the Q4 figures won't have much of an impact on confidence in the current quarter as we're already a third of the way through it; however, I imagine that some printers will certainly experience projects being delayed or cancelled.

"People have to face up to the fact that they overborrowed, overspent and overpaid for their houses and that - as Mervyn King has said - there will have to be pain in order to sort the economy out.

"In the medium-term that means that interest rates will have to go up to control inflation and to support the currency to an extent; obviously that will put downward pressure on economic growth, so in light of the soft economic news I expect the MPC will probably delay that decision by at least a quarter, which would put it in the second half of the year."