Output of the production industries decreased by 1.3% in Q2 2012 compared with Q1 2012, following a decrease of 0.5% between Q4 2011 and Q1 2012.
Construction sector output decreased by 5.2% in Q2 2012 compared with Q1 2012, following a decrease of 4.9% between Q4 2011 and Q1 2012.
Ian Brinkley, director of The Work Foundation said: "These figures suggest the recent good news on jobs will be short-lived and we can expect unemployment to start to rise again. The government needs a credible plan to give the private sector the confidence to invest and innovate.
"The numbers suggest the economy is moving from a shallow, double-dip recession into a deeper and more prolonged slump. A contraction of 0.7% in three months is extremely worrying, regardless of any effects from the Jubilee and the bad weather. While construction has been the biggest contributor to the fall in GDP, both manufacturing and service sectors have also shrunk, with few parts of the economy escaping the pain.
"The collapse in construction output has been caused by the double shocks of a weak housing market and a collapse in government infrastructure spending. The government should take advantage of the UK's creditworthiness to reverse some of the cuts in public investment, especially those projects which could start straight away."