DAVID Cameron admitted today he was "disappointed" by figures showing the UK economy shrank in the final quarter of last year.

The Prime Minister said the worse-than-expected 0.2 per cent contraction showed that the country was facing "extremely difficult economic times".

The Office for National Statistics' first estimate for the figure marks the first time the UK's gross domestic product (GDP) has fallen since the final quarter of 2010 when the Arctic weather was blamed for a 0.5 per cent drop. The City had pencilled in a decline of 0.1 per cent.

The contraction was driven by a 0.9 per cent fall in manufacturing, a 4.1 per cent drop in electricity and gas production as the warm weather caused people to turn down heating, and a 0.5 per cent fall in the construction sector, while the powerhouse services sector ground to a halt.

A small impact is also likely from the public sector strikes on November 30, when nearly a million working days were lost.

At Prime Minister's Questions in the Commons, Labour leader Ed Miliband said the coalition was out of "excuses" for the poor performance.

Mr Cameron said: "These are extremely difficult economic times. These are disappointing figures, they are not unexpected figures."

The Premier said they reflected the "overhang" of debt run up under the previous government, high food and commodity prices, and the eurozone crisis.

He insisted the Government had to stick to its "credible plan" to tackle the deficit, which had delivered record low interest rates.