Chancellor Sajid Javid has maintained the fundamentals of the British economy are “strong” despite the worst figures in seven years.
The UK’s economy shrank for the first time since 2012, with manufacturing dropping 2.3 per cent and construction output falling 1.3 per cent.
The Office for National Statistics (ONS) said Gross Domestic Product decreased by 0.2 per cent between April and June.
Mr Javid has dismissed concerns of a recession, and said the UK will end up “stronger and more resilient” once it leaves the EU.
“The government is determined to provide certainty to people and businesses on Brexit - that's why we are clear that the UK is leaving the EU on 31 October,” he said.
The results were weaker than both market expectations and the Bank of England’s forecast, and sent the pound falling to trade at a two year low of 1.206 US dollars.
ONS spokesman Rob Kent Smith said the poor results are partially the result of a strong first quarter.
“Manufacturing output fell back after a strong start to the year, with production brought forward ahead of the UK's original departure date from the EU,” he said.
“The construction sector also weakened after a buoyant beginning to the year, while the often-dominant service sector delivered virtually no growth at all.”
Economist Howard Archer said the economy should stabilise once Brexit has been finalised.
“On the assumption that the UK does ultimately leave the EU with a 'deal' on October 31, we expect an easing of uncertainties to allow economic activity to gradually pick up,” he said.