Britain's double-dip recession is not as deep as previously feared after revised figures showed a smaller contraction in the second quarter of the year.

Gross domestic product (GDP) — a broad measure of the economy — fell 0.5% between April and June in the Office for National Statistics' second estimate, which is better than the initial 0.7% drop that shocked the City last month.

But despite the upward revision, it still represents the biggest quarter-on-quarter fall for more than three years. It means the economy remains mired in the longest double-dip recession since the 1950s.

Smaller than previously thought falls in the production and construction sectors drove the figure higher, while the powerhouse services sector was unrevised, with a 0.1% fall.

Figures released today showed the UK's trade deficit increased to £7.3 billion, up from £3.7 billion in the previous quarter as the eurozone debt crisis hit exports — its biggest fall since the third quarter of 2010, which wiped 1% off the GDP figure.

Business investment also fell for the first time for more than a year.