The UK economy is growing at its slowest rate for more than a decade as consumer confidence ebbs, spending slows and manufacturing plunges in recession, official data showed yesterday.

Provisional figures from the Office for National Statistics (ONS) pointed to GDP growth of only 0.4 per cent between April and June, meaning the economy grew 1.7 per cent on a year earlier.

This was the weakest year-on-year performance since the first quarter of 1993 and will increase scepticism among economists that Chancellor Gordon Brown will miss his target of at least three per cent economic growth this year.

The figures also show that the already battered manufacturing sector has technically fallen into recession after output contracted 0.7 per cent in the second quarter - on top of a 0.9 per cent decline in the previous three months.

Problems facing the UK economy include the rapid rise of oil prices, which has pushed up costs at a time when companies are having to hold prices to remain competitive against cheap imports.

Output for service industries was estimated by the ONS to have risen by 0.6 per cent - down on the increase of

0.7 per cent seen in the first quarter.

A survey by the British Chambers of Commerce earlier this month pointed to a sharp deterioration in conditions in the service sector.

The BCC said confidence among firms in the services sector about future profitability was at its lowest since the first quarter of 2003, while all other key indicators such as employment were pointing to a slowdown. It believes economic growth this year could be at least a third lower than fore-cast by the Chancellor.

Investec economist Philip Shaw said the data was worse than expected and prompted a

0.1 per cent cut in his forecasts for economic growth this year to just 1.9 per cent.

Little recovery was expected next year when Mr Shaw predicted expansion of two per cent - down from his earlier forecast of 2.1 per cent.

The deceleration in the service sector showed it was not ?the engine of growth? it used to be, while confirmation that the manufacturing sector had fallen into recession added to the gloom, he said.

HSBC economist John Butler said the figures supported a reduction in interest rates next month but he added: ?Does an August cut open the door to more aggressive moves this year? The recent more upbeat data on retail sales, household borrowing and the probable delay in the timing of tax hikes suggest that the MPC may cut and then wait and see.?

Lehman Brothers economist Alan Castle said the figures confirmed his expectation for a rate cut next month.

?The fact that year-on-year growth was the lowest since 1993 shows the UK slowdown is not just something that has been seen over the last couple of quarters, but something that has been entrenched for the past year or so,? he said.