The country is plunging into recession, economists have warned as the latest official statistics revealed the economy is juddering to a halt.

The Office for National Statistics reported the economy slowed in the second quarter to growth of just 0.2% above that recorded in first three months of the year - the worst performance in seven years and delivering another bloody nose to Gordon Brown's reeling administration.

The annual rate of growth in the economy is now at 1.6%, the lowest since 1993, when the country was coming out of its last recession.

A sharp slowdown in the housebuilding and construction market - down 0.7% on the quarter - was the main drag, with industrial manufacturing output also contracting significantly, down 0.5%.

"The UK is on the brink of recession," said Hetal Mehta, senior adviser to Ernst & Young's highly regarded economics units, the Item Club.

"That output shrank in both industry and construction suggests the underlying picture may be even worse than the headline numbers suggest."

Geoffrey Dicks, chief economist at Royal Bank of Scotland added: "After an unbroken run of 64 quarters, the first negative quarter since 1992 appears to be under way."

Paul Dales at Capital Economics said the figures had caught the Bank of England's interest-rate setting monetary policy committee badly off guard as the Bank's own economists had been forecasting a more buoyant economy with second quarter annualised growth of 2.3%.

"The UK economy has weakened dramatically even before the full impact of the credit squeeze and the housing market downturn has been felt," said Dales. "An outright recession remains our central scenario."

An economy is officially in recession when quarter-on-quarter figures show a contraction in GDP - gross domestic product - activity for two consecutive quarters. That, say economists, could happen over the final two quarters of 2008.

"All parts of the economy now look very weak," said Dales. "What's more, the worst is yet to come.

"The latest business surveys suggest that overall economic growth is grinding to a complete halt in the third quarter. The still-overvalued housing market and over-indebted household sector mean this slowdown is not going to be brief."

James Knightly at ING said the slowing growth comes as the Bank's rate-setters were hamstring by runaway inflation, which could rage as high as 5% according to some, busting the 2% target set by the Government.

"Recession seems probable but assuming commodity prices continue to moderate and wage pressures remain benign the Bank could yet lower interest rates aggressively to limit the severity of the downturn," he said.

Several economists now forecast multiple rate cuts to re-float the economy next year, taking rates as low as 3.5%.