BRITAIN'S double-dip recession is worse than first thought, official figures showed yesterday, prompting Labour to denounce the UK's "no growth government with its head in the sand".

According to the Office for National Statistics, gross domestic product fell 0.3% between January and March, down from the first estimate of 0.2%. There is a final estimate next month.

Much of the downgrade was due to construction, which over the period fell 4.8%, the worst decline in more than a decade.

Alex Salmond also raised the issue at Holyrood of how the Scottish economy is suffering from the effects of the eurozone crisis.

Meanwhile, Ed Balls, the Shadow Chancellor, launched an attack on the Government's policies. He said: "What more evidence can David Cameron and George Osborne need that their policies have failed and they now need a change of course and a plan B for growth and jobs?

"Not only has our economy now shrunk in the last six months by 0.6%, it has actually shrunk by 0.4% in the year-and-a-half since the spending review.

"And it is families and businesses that are paying the price with incomes being squeezed, companies going bust and long-term unemployment at a 16-year high."

Stewart Hosie for the SNP urged the UK Government to increase capital spending to support the list of 30 "shovel- ready" projects published by the Scottish Government.

While the downgraded figures pile more pressure on Mr Osborne to consider a Plan B to boost growth and investment, Chloe Smith, the Treasury Minister, insisted the Chancellor would not be deflected from his drive to get the deficit down, saying: "We need to stick to our path. It would not be acceptable to fail to deal with our debts."

However, earlier this week, Deputy Prime Minister Nick Clegg revealed the Coalition was preparing a "massive" increase in investment in infrastructure but denied it amounted to a Plan B.

Downing Street pointed out that while exports of goods to non-EU countries had grown by 4.4% in the first three months of the year, exports to the EU had fallen by 3.1%.

"We have always made clear – and the Chancellor said in his autumn statement – that if the rest of Europe doesn't grow it would prove hard to avoid a recession here in the UK," insisted the Prime Minister's spokesman.

Meanwhile, doubt was cast on the data with the British Chambers of Commerce saying: "Virtually every business survey has indicated positive growth in the economy in the first quarter."

At Holyrood, the First Minister, responding to a challenge from Labour leader Johann Lamont on the economic case for Scotland separating from the UK, said there would be a Government debate on the issue next week.

Mr Salmond has said an independent Scotland would continue to use sterling and Ms Lamont asked: "Isn't the real lesson of the euro crisis that you cannot share a currency, you cannot have monetary union without a fiscal union and a political union."

The First Minister argued it was a "totally different situation" in Greece. He said: "We're talking about a situation where the productivity rates of Greece are about 40% below that of Germany. That creates huge difficulties and tensions within the euro area."

Ms Lamont insisted Mr Salmond was refusing to confront "the logic of his own position that the Bank of England would be a lender of last resort for a Scotland that was outside the UK".

She said: "The First Minister used to say we needed a Scottish pound because interest rates set in London were bad for Scotland. Yet now that's what he advocates. He used to say we'd join the euro because the pound was failing. Now he's saying – keep the pound."

Mr Salmond said Labour was in favour of joining the euro adding: "I really think lectures on economic consistency, with regard to the euro area, coming from the Labour Party actually takes the biscuit."