Research from the Organisation for Economic Cooperation and Development think-tank has been published today, and their report says Britain has slipped back into an official recession.

Some economists say that a contraction of the economy has been inevitable given higher unemployment, higher government spending and higher taxation. The chief economist for OECD, Pier Carlo Padoan, said: “The [eurozone] has only managed to get a bit further away from the edge of the cliff”.

However, the ‘double dip’ recession was denied by the chancellor, George Osbourne, who said Britain was enjoying encouraging economic signs. He denied a return to negative growth.

The Treasury said OECD’s findings were flawed, and Investec also doubted OECD’s findings as Mr Osbourne said the government was working hard to make improvements. But shadow chancellor Ed Balls took the opportunity to point out where he believed the coalition were failing: “A double-dip recession can and should be avoided. But after 15 months of zero growth under George Osborne, simply avoiding a technical recession is not good news for our economy.”

OECD, who are based in Paris, say that the British economy shrank by 0.3% at the end of last year, and has shrunk a further 0.1% in the first quarter of 2011. GDP has fallen around 0.1% in the first quarter. Although there is continued disagreement about the economy, experts generally agree that the outlook is better in the second half of 2012, but predictions of growth are still conservative, and many in Europe feel that harsh cutbacks, poor lending from banks
and rising inflation will do little to improve the situation.

Their report goes on to predict that growth may return as summer approaches, a concern previously voiced by the Bank of England. Analysts warn that the planned Diamond Jubilee in June could spell problems for the economy as the country will enjoy two bank holiday days in a row. This is a relatively rare occurrence, but Britain also received an extra bank holiday
to celebrate the Royal Wedding last year. In the meantime, the OECD say there is “scope” for more quantitative easing, diminishing the value of sterling in the process.

The OECD report warned that the USA is likely to experience a much faster bounce back this year than the eurozone, with Italy finding it hardest to emerge from ongoing financial troubles as the two continents drifted further apart economically.

Italy is already in recession, and the economic situation there is expected to get worse. The US economy is expected to grow by 2.9% in the present quarter and 2.8% next quarter as consumer confidence also begins to pick up. The outlook for Europe is, according to OECD paperwork, “very weak”, and high oil prices are expected to contribute to the difficulties, say the company.

The organisation also report a slowing in growth for emerging economies such as China.

Germany has also shown warning signs, but unemployment rates recently fell to a record low.