Britain's economy contracted by a worse-than-expected 0.2 per cent in the fourth quarter of last year, the Office for National Statistics announced on Wednesday.

Analysts had forecast gross domestic product (GDP) to shrink by 0.1 per cent in the October-December period, compared with the third quarter.

"GDP decreased by 0.2 per cent in the fourth quarter of 2011, driven by weakness in the production sector and the construction sector," the ONS said in a statement.

That marked the first quarterly contraction since the fourth quarter of 2010, when economic activity was hit by freezing weather and fell by 0.5 per cent.