Pressure mounted on the chancellor to moderate his austerity programme after analysis by a leading thinktank showed the UK economy heading for a triple-dip recession and high profile employers Honda and Jessops cut hundreds of jobs.
The National Institute for Economic and Social Research (NIESR) said in its monthly health check that the economy shrank by 0.3% in the three months to December. Against a backdrop of weak consumer spending and a drop in manufacturing output, the estimates from NIESR may add fuel to campaigns for George Osborne to adopt a more radical approach to generating growth.
Plans by Honda to shed 800 jobs at its Swindon plant added to the dismay among unions and business lobby groups. Honda blamed a lack of demand for cars in recession-hit markets across continental Europe. Car sales were up 5% in Britain during 2012. The Unite union called the decision a "hammer blow" for those affected and the Swindon economy, and pointed out that 325 temporary workers had also left recently.