Severe winter weather, which caused havoc across the country, was the main contributor to the contraction [Reuters]

Britain's economy shrank by 0.5 per cent in the last quarter of 2010, figures reveal, raising fears of a double-dip recession.

The Office for National Statistics said December's severe winter weather was largely to blame for the surprising figures, which show the first contraction of growth since the third quarter of 2009.

"The disruption caused by the bad weather in December is likely to have contributed to most of the 0.5 per cent decline, that is, if there had been no disruption, GDP would be showing a flattish picture rather than declining," it said in a statement.

Analysts had previously been expecting modest growth of 0.4 per cent for that quarter.

The figure is likely to spark concerns over the strength of the British economy as the coalition government brings in a raft of austerity measures aimed at curbing the country's national deficit.

The measures include dramatic cuts to public services including hundreds of thousands of public sector job losses.

George Osborne, the country's finance minister, said the figures were "disappointing" but that the country would "not be blown off course by bad weather".

``It's notable that sectors of the economy that are less affected by the poor weather, such as manufacturing, continue to perform strongly, helping to rebalance our economy," he said,

Northern Europe was badly affected by severe snow and ice last month, causing major air, road and rail disruption.

Source: Agencies