Businesses in the UK face the threat of losses and even bankruptcy in 2011 as the latest figures show the economy shrank in the last three months of last year.
Construction slumped 3.3 per cent compared with the third quarter in 2010, while services shrank 0.5 per cent.
The news sent the pound sliding and shares fell in the City.
Financial experts blame the cold weather for the unexpected slowdown in growth and the drop in construction.
The data was published by the Office for National Statistics.
Forecasters are warning the UK economy may not be robust enough to cope with the government's continuing plans to cut public spending.
Chancellor George Osborne maintained that not pursuing efforts to tackle the deficit would pose a greater threat to the UK's future prosperity.
Osborne said: "There is no question of changing a fiscal plan that has established international credibility on the back of one very cold month. That would plunge Britain back into a financial crisis."
He added: "We will not be blown off course by bad weather."
The depressing GDP figures come at a time when the banks are in a stalemate with the government over targets for small business lending.
Banks are refusing to agree to new targets unless the bank bonus schemes are reviewed by the government.
It looks like the harsh winter of 2010 has left its mark on the future growth of all businesses in the UK.
UK economy shrinks 0.5pc (Daily Telegraph)
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