The economy grew at a slower rate than expected in the second quarter, dropping to its weakest level in 12 years, according to official data.
New figures from the Office for National Statistics (ONS) show annual GDP growth at just 1.5% over the second quarter, revised down from 1.8%, its lowest point since the first quarter of 1993.
The economy grew 0.5% in the three months to June, compared to the previous three months, which was left unrevised from its initial estimate.
The news puts further pressure on chancellor Gordon Brown, who admitted over the weekend that his 2005 growth forecasts of 3-3.5% are too optimistic, despite business' and independent analysts' assertions for months that the estimates were too high.
Business, meanwhile, said there are some positives in the ONS' new numbers.
"The new figures are very disappointing but not entirely negative," said David Kern, economic adviser to the British Chambers of Commerce (BCC).
The BCC revised its 2005 growth forecast down from 2% to 1.7-1.8%.
"Although growth in 2005 will be lower than expected, there is also evidence that the low point of the sharp economic slowdown was in Q1 2005, and a modest improvement occurred in Q2, albeit from a lower base than previously thought," Kern said.
He added that the revised figures reveal that there is more room in the economy than originally thought and perhaps now the Bank of England's interest rate-setting Monetary Policy Committee (MPC) might take a more accommodating stance toward further cuts to the base rate, which currently stands at 4.5%.
Inflationary pressures may make immediate cuts impossible, he said, but once the the impact of higher petrol prices wanes, the MPC must act quickly to improve business confidence.
