FEARS of a triple dip in Scottish and wider UK economic output have been fuelled by a survey showing the services sector last month suffered its worst contraction since April 2009.

The grim survey of UK services, published yesterday by the Chartered Institute of Purchasing and Supply (CIPS), adds to a slew of indicators that the overall economy may have suffered renewed contraction in the fourth quarter.

The report came as Shadow Chancellor Ed Balls urged George Osborne to act now to avoid Britain plunging into a triple dip recession.

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Asked about the UK falling back into recession, Mr Balls said: "It's not the most likely outcome but a real possibility."

"A risk-averse chancellor should act now to prevent a triple dip recession and I see more of the same from a Chancellor who told us two years ago that we were safe and then there was another recession. It's a real concern and the chancellor should act."

Scottish economists highlighted the danger of a triple dip in Scotland, and in the UK as a whole, following news that CIPS' seasonally adjusted business activity index for services, which does not include the retail sector, had dropped from 50.2 in November to 48.9 last month.

This was the first time the index, which is calculated by CIPS to separate expansion from contraction, had been below 50 since the snow-affected month of December 2010. It signalled the sharpest monthly fall in services activity since April 2009.

Chris Williamson, chief economist at CIPS survey compiler Markit, now estimates UK gross domestic product will have fallen by 0.2% in the fourth quarter.

David Bell, professor of economics at Stirling University, said: "I don't think any of the current indicators look all that good for the most recent quarter.

"It would seem to me there does seem to be a significant chance of a triple dip.

"There are very few notes of optimism around."

Mr Bell noted a prediction earlier this week from accountancy firm PKF that nearly 400 Scots per week will be made bankrupt this year.

He added: "The survey on bankruptcies ... suggests that Scotland is certainly not doing any better and may be doing a little bit worse than the rest of the UK."

Brian Ashcroft, emeritus professor of economics at Strathclyde University, said: "I think there is a strong chance of negative growth in the final quarter. It looks as though Christmas [trading] was weak."

He also noted the weakness of Lloyds TSB Scotland's latest quarterly business monitor for Scotland, which was published earlier this week and is conducted by Strathclyde University's Fraser of Allander Institute.

This survey showed 39% of Scottish firms suffered a fall in turnover in the three months to November, while only 29% achieved a rise and 32% reported a static position.

Mr Ashcroft said: "That gives an indication of what Scotland might expect in the fourth quarter."

l Labour has locked horns with the Coalition over its plans for a £1 billion tax grab on the pensions of high earners to help get the long-term unemployed back into work.

Defending Labour's new policy, Ed Balls said: "Getting somebody back into work is the best way to get them paying tax, to pay bills of welfare down.

"It's fair to say to the taxpayer there is no option of being on benefits year after year."

Prime Minister David Cameron branded Labour's policy a "bizarre" reheating of an old one and urged the party to join with the Government in voting for a 1% cap on benefit rises in a Commons vote next Tuesday.