The UK economy is now smaller than when the Coalition came to power following an unexpectedly severe drop in output.

Data from the Office for National Statistics revealed that the economy contracted by 0.7% in the second quarter of the year from the level it was at the end of March. It follows a contraction of 0.3% in the first quarter of the year which itself came on the back of a contraction in the final three months of 2011. Overall, the economy has shrunk 0.3% since George Osborne became chancellor in May 2010.

But the 0.7% contraction over the spring quarter confounded most of even the gloomiest expectations. “It is clear that Britain is in the midst of the most prolonged period of stagnation it has faced in decades,” British Chambers of Commerce director general John Longworth told Sky News. “Ministers can’t expect firms to bust a gut to grow if they fail to take a long-term approach to creating an enterprise-friendly environment.”

As forecast by Professional Manager, a grievous slump in the construction sector – an industry at the cutting edge of the economy – continues to be a major contributory factor to the ongoing malaise. The industry shrunk by 5.2% over the spring.

Joey Gardiner, assistant editor of Building magazine, told Professional Manager that it was time the government changed direction. “We are now looking at a 10% drop in construction output in six months – that’s a tenth of the industry,” he warned. “Things are incredibly severe for this sector at the moment. Although there are lots of developments in construction that support the government’s position on sorting out the deficit, it’s now clear that the way the government has gone about it is not working.”