We all know the country has deep-rooted economic problems and these disappointing figures confirm that.

We're dealing with our debts at home and the debt crisis abroad. We've made progress over the last two years in cutting the deficit by 25% and businesses have created over 800,000 new jobs.

But given what's happening in the world we need a relentless focus on the economy and recent announcements on infrastructure and lending show that's exactly what we're doing.

Ed Balls, shadow chancellor

These shocking figures speak for themselves. As we warned two years ago, David Cameron and George Osborne's ill-judged plan has turned Britain's recovery into a flatlining economy and now a deep and deepening recession.

And with Britain just one of two G20 countries in a double-dip recession and borrowing now going up as a result, it is clear that this government's plan has failed. If these figures don't make the chancellor wake up and change course, then I don't know what will.

Thank goodness the Olympics will give our economy a much-needed shot in the arm. But this short-term boost is not enough – we need a plan B now to get the economy moving again and radical reforms to set Britain on a new course for jobs, growth and long-term prosperity. The longer the chancellor refuses to act, the heavier the price our country will pay.

As the IMF said last week the government's spending cuts and tax rises – which we warned go too far and too fast – have choked off growth and risk causing permanent damage to our economy.

Peter Dixon, Commerzbank

Terrible data. Frankly there's nothing good that comes out of these numbers at all. I know we were expecting a poor number because of the jubilee and the effects it would have on output but it's way worse than anticipated. It's hard to see now how we're going to get an even flat figure for the year, even though we're expected to get a rebound in Q3. The economy looks to be badly holed below the water line at this stage. It's a far worse period of activity than we'd expected.

James Knightley, senior economist, ING Bank

Our issue with this release is that it is merely a very early estimate based on only 44% of the complete information required to provide the "final" GDP number. Consequently, the majority of the report is based on the statisticians' own estimates, based on their models.

Another problem is that the GDP data isn't consistent with the message from the employment data (employment up 200,000, unemployment down best part of 100,000 since the UK supposedly fell back into recession).

Consequently, while the third consecutive contraction in GDP is going to attract plenty of headlines in the press, it is unlikely to prompt a policy response from the Bank of England.

John Cridland, director general, CBI

These are very disappointing figures. They show there has been a lack of growth in the first half of 2012. When I talk to businesses on the ground, however, the overwhelming view is that right now the economy is flat rather than negative, and there is potential for Britain to get back into growth later in the year.

Howard Archer, chief UK and European Economist, IHS Global Insight

This really is a very nasty surprise indeed. The longer that the economy fails to see underlying significant, sustainable growth, the harder it will be for the government to stick to its austerity plans.

Further QE [quantitative easing] is highly possible in the fourth quarter, particularly if consumer price inflation falls back further as seems likely.

It is also possible that the Bank of England could eventually cut interest rates from the current record low level of 0.50% where they have stood since May 2009, although we remain dubious that the MPC [monetary policy committee] will choose to go down that route given significant doubts about the net beneficial impact of such a move.

Ranvir Singh, chief executive of the market analysts at trader news service RANsquawk

No amount of sunshine or Olympic hype can hide the fact this is a black day for the economy.

A fall in output had been widely expected, but such a vertiginous drop tested the markets' stoicism to the limit.

Beyond the immediate sense of GDP OMG, gnawing worries over the economy remain.

After three consecutive quarters of contraction, and with little obvious plan for growth, the Bank of England's QE programme is looking increasingly impotent in the face of weak consumer demand and a flailing construction sector.

Glenn Uniacke, senior dealer at forex specialist Moneycorp

It's official. The UK economy is in tatters. Confirmation of a third quarter of contraction was expected but few expected it to be this bad. This is a bleak day for the British economy.

The UK, like most other nations, has too much debt, no growth plan and, with the eurozone crisis, is operating against a brutal economic backdrop.

With the UK's clearly deteriorating outlook we will see renewed pressure on the chancellor and the Bank of England. The UK economy needs direction but it feels rudderless.

Len McCluskey, Unite union general secretary

Our economy is shrinking. The deficit is actually getting worse and we are being told there is no end in sight to the government's austerity programme. It is clear that the government's economic policies are a total failure.

With almost 90% of the cuts still to come the UK government seems hell bent on kicking the stuffing out of Britain while doing nothing to sort out the mess left by casino capitalism.

Lee McDarby, Investec Corporate Treasury

Investec's economists forecast a weaker number than most of the market but nobody saw a number this bad coming. Poor weather and an extra bank holiday have been blamed on the quarterly contraction of 0.7%, but data like this suggests that the UK can't hide behind Europe's woes for much longer.

Capital Economics

The UK fell deeper into recession in the second quarter. Although some temporary factors pulled down output, it looks like there was some underlying contraction too. Even allowing for a decent bounce-back in Q3, our forecast for a 0.5% fall in GDP in 2012 as a whole looks on track.

John Walker, national chairman, Federation of Small Businesses

The continued fall in GDP was expected. The government agrees that small businesses are the key to growth but they cannot drag the country out of recession until they have both the confidence and means to do so.

Policies such as credit easing, quantitative easing, the national insurance contributions (NICs) holiday and youth contract have yet to have a real impact on the ability of small firms to take on staff and grow. The FSB wants to see bold action such as extending the NICs holiday to all small firms that want to take on staff and government to bring forward infrastructure projects due in 2014 to really give the economy a boost.

David Kern, chief economist, British Chambers of Commerce

It is difficult to reconcile the very positive recent labour market figures published by the ONS, with the continued declines reported in GDP. Increases in employment, and in the average numbers of hours worked, at a time when output is falling, suggest implausible falls in productivity.

We believe the employment figures are more accurate than the output figures, and the GDP figures are likely eventually to be revised up. Regardless of the uncertainty surrounding the ONS estimate, it is clear that economic growth remains much too low and the economy is stagnating. The main aim must now to focus on measures that will help businesses grow, invest, and create jobs.

Chris Williamson, Markit

The current rate of decline in GDP would normally be consistent with the private sector shedding staff at least 100,000 per quarter. We can think of no reason why companies would be taking on staff at such an impressive rate if the economy really was collapsing to the extent that the GDP numbers suggest.

Either the GDP numbers are understating the health of the UK economy, suggesting the country has been collapsing at a rate even faster than crisis-hit Spain so far this year, or the employment numbers and business surveys have been overstating growth. Our suspicions are that the revision-prone GDP numbers will eventually be estimated to show growth.

guardian.co.uk