According to the ONS, the Office for National Statistics, output has fallen by 0.5% between July and September. This is the first time that the economy has shrunk, during this period, since 1992. The news had a dramatic effect in the city with big drops in the value of Sterling and on the UK stock exchange.

Despite the news, the Chancellor was confident that, although this will be a “difficult period” the nation “will get through it”. Mr Darling also called for other nations of the world to work together, with the UK, on plans that will deal with the global debt crisis and put more money in peoples pockets.

The decline in output has been blamed on high energy prices, falling house values and the credit crunch which has put pressure on consumers struggling with out of control debt and forced people to tighten their belts.