Fears of a double dip recession were revived today as shock figures showed an economic decline of 0.5 per cent for the end of last year.
The Government blamed the unexpected plunge between October and December - which ended 12 months of growth - on the big freeze and refused to change course.
But experts insisted it was not solely to blame and raised serious concerns about the strength of the economy to withstand the coalition's drastic spending cuts.
The fall in GDP - the first since the third quarter of 2009 - was driven by a 0.5 per cent drop in the key services sector which makes up more than 75 per cent of the economy.
Taking the drop into account, the total growth for 2010 stands at 1.4 per cent which is well below analysts' forecasts.
The figures, from the Office for National Statistics, are preliminary estimates and subject to revision but will spark fresh questions about the Government's approach.
The City responded with alarm with the FTSE-100 in the red and Sterling falling.
They also pile pressure onto Bank of England governor Mervyn King who is tasked with taming inflation and supporting growth.
He is due to give a speech later today but analysts warned the contraction meant an imminent rates rise - needed to offset soaring inflation - was now inconceivable.
Howard Archer, chief European& UK economist at IHS Global Insight, said: 'This is a stunningly bad outcome - it is a performance far worse than even the most pessimistic of forecasts.
Experts had expected growth of between 0.2 and 0.6 per cent in the fourth quarter, although had warned the weather made it hard to predict.
The dramatic contraction in GDP will seriously damage prospects over the next year as the coalition rolls out an £81billion cuts package.
And it will shake confidence that the private sector is robust enough to pick up the slack as the public sector suffers swingeing cutbacks.
Chancellor George Osborne admitted the numbers were 'obviously disappointing' but remained defiant, blaming the weather.
'We have had the coldest weather since records began in 1910 and this has clearly had a much bigger impact on the economy than anyone expected,' he said.
'It's notable that sectors of the economy that are less affected by the poor weather, such as manufacturing, continue to perform strongly, helping to rebalance our economy.
'There is no question of changing a fiscal plan that has established international credibility on the back of one very cold month.
David Cameron, at a Cabinet meeting today, also insisted the coalition had to stand firm and insisted 'choppy' growth was to be expected.
Public borrowing rose another £16.8billion in December, new figures revealed today.
The total was some relief as it was a significant year-on-year decline from the £21billion borrowed in December 2009.
Overall borrowing for the year to date now stands at £118.4billion, according to the Office for National Statistics.
The Government's target is £149billion for the financial year.
Today's level will ease fears borrowing was in danger of overshooting forecasts from the Office for Budget Responsibility.
His spokesman said the Cabinet were agreed that the strategy on the deficit was correct and has to be followed through.
An ONS spokesman said GDP would probably have been flat at 0 per cent in the final quarter had it not been for the weather.
A series of grim figures have resulted from the Arctic conditions of last month with retailers, housebuilders and transport firms all seeing a slump.
Retail sales in the UK suffered their worst December on record as the high street battled with freezing temperatures and heavy snow.
Construction output, which had been rising and helped boost growth in the second and third quarter, ended in the fourth and fell 3.3 per cent.
Manufacturing provided some reprieve with output up 0.9 per cent across the three months.
New shadow chancellor Ed Balls said the figures were a 'matter of great concern' and pointed out that even without the weather, economic growth would have been flat.
'With families and businesses already facing both rising unemployment and rising inflation, the fact that the economy is now shrinking means the Conservative-led Government's claims to have saved the economy and secured the recovery will ring very hollow indeed,' he said.
'It is now becoming even clearer that when David Cameron and George Osborne complacently congratulated themselves in the autumn for securing economic recovery, this was in fact the result of decisions taken by the Labour government to get the economy moving again.
'The Government inherited an economy that was strengthening, with growth of 1.1 per cent in the second quarter - thanks to decisions we took to support jobs and get the economy moving. It also meant last year's deficit came in £20billion lower than previously forecast.
Gordon Brown led Labour attacks on the Government's plans in his first major intervention in domestic politics since he quit as PM in May.
Jonathan Loynes, chief European economist at Capital Economics, described the figures as 'shockingly bad' and raised serious concerns over whether the economy is strong enough to withstand the coming fiscal tightening.
The analyst expects the economy to rebound this quarter but fears other adverse forces, such as the impact of the latest VAT hike, could limit the size of the bounce.
TUC general secretary Brendan Barber said: 'Bad weather or not, these are truly awful figures, much worse than anyone expected.