The news came as the latest Office of National Statistics retail sales data showed a 0.8 per cent fall in non-seasonally adjusted value in December – the biggest fall since records began in 1986.
Non-seasonally adjusted sales volume increased by 1.8 per cent in December compared with the same period a year earlier.
Prices also showed the biggest fall since 1986, and were down 2.6 per cent.
The ONS said the non-seasonally adjusted volume estimate was most indicative of performance because of exceptional factors including the VAT reduction and extent of discounting.
In the final quarter of 2008 the UK's gross domestic product fell by 1.5 per cent. It was the second quarter of contraction and means the UK is officially in recession.
The fall in growth is the biggest quarter-on-quarter decline since 1980.
Since 1955 the average UK recession has lasted three quarters, although the past two recessions have lasted for five.
The consensus forecast for 2009 is now for a 2.1 per cent decline in GDP.
As recently as December, the forecast was for a drop of 1.5 per cent.
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