The estimated contraction in the UK’s gross domestic product (GDP) was far worse than expected by economists and marks the first time the UK economy has fallen into negative territory in 16 years.

It is also the biggest GDP decline since the fourth quarter of 1990.

Early reports said that "the prospects for a UK recession loomed large", but that is something of an understatement.

Although the official definition is that a recession is two consecutive quarters of negative growth, we can now say with certainty that the UK is in a recession.

And it is not just any recession, the equivalent of an M & S recession - a top quality, very deep, recession.

The evidence of that was there for all to see in this morning's massive drop in the markets.

In the City they had been expecting bad news, but they did not expect it to be as bad as this.

Vicky Redwood, of Capital Economics, described tod

She said: "The fact that a recession is already under way isn’t a surprise – even Mervyn King and Gordon Brown referred to it earlier this week.

"But the fact that output has shrunk so much so early on in the downturn is clearly worrying. We expect the economy to contract for around two years in all, with a peak to trough drop in output of 1.5% or even more."

Her comments were echoed by economists and analysts across the City as dealers screen were a sea of red today as the stock market was well and truly spooked. More than spooked, absolutely terrified.

Global Insight economist Howard Archer said he expected the Bank of England to cut interest rates to 4% next month and to 2.5% or even lower in 2009. he is probably right. And it may even come earlier than that.

Of course, today's figure come on top of a seemingly endless stream of catastrophe and calamity.

Government's across the globe have intervened in a variety of ways to prop up their banking systems.

In Scotland, two of our once mighty institutions - Royal Bank of Scotland and HBOS - have been brought to their knees and had to be promised billions by the government.

Today's news on growth piles even further pressed on RBS and HBOS, in particular.

Their shares plummeted along with other banking stocks, but it is fair to say that they were in an even more fragile position than some of their peers.

Taking RBS, it is now difficult to see how new chief executive Stephen Hester can do anything but cut back its activities significantly when he takes over next month.

That is likely to mean sales of parts of the business - if anyone is buying - but also can significant job losses be avoided? Many observers believe they cannot.

As to HBOS, today will surely mean that those who suggest that the institution could survive on its own, or that Bank of Scotland could be revived, will have to work harder to justify their claim.

But amid all the gloom, let me try to bring you a little piece of good news.

Manufacturing businesses are becoming "very strong and very resilient" as a result of the current financial crisis, a Bank of England rate-setter said today.

Andrew Sentance, a member of the Bank of England’s Monetary Policy Committee, told a radio station there was a feeling that companies would get through the difficult economic times.

Speaking to BBC Radio Leeds, Dr Sentance said the underlying economy in West Yorkshire was still relatively strong and businesses were restructuring to cope.

He said: "I would say that manufacturing has restructured itself and has become very strong and very resilient."

Let us hope that there is something in what Sentance has to say. If there is not, then we are in for truly dark times indeed.