1.19pm BST

The eurozone has slumped into its longest recession ever, after economic activity across the region fell for the sixth quarter in a row.

Economic output across the single currency area fell by 0.2% in the first three months of 2013, statistics body Eurostat reported today (see 10.10am).

France, Spain, Italy and the Netherlands all saw their economies shrink as the economic crisis in the eurozone continued to hit its largest economies.

Eurostat’s figures showed that the eurozone economy has now contracted by 1% over the last year, putting further pressure on leaders as unemployment climbs to new record highs.

The 0.2% contraction in the first quarter of 2012 was an improvement on the 0.6% drop recorded between October and December, but analysts warned that the eurozone’s economic outlook is darkening.

Stephen Lewis, chief economist at Monument Securities, commented:

What seems incontrovertible, on this evidence, is that the member-states of the euro zone are on the wrong track. The costs of the zone’s one-size-fits-all strategy are becoming brutally apparent.

France was dragged back into recession by a 0.2% drop in GDP, announced on the first anniversary of Francois Hollande being sworn in as president (see 6.44am)

Pierre Moscovici, French finance minister, denied that Paris’s forecast of 0.1% growth this year was too optimistic. “I’m sticking to the figures,” Moscovici told reporters, adding that the EU must prioritise growth over tackling budget deficits.

Photograph: Thomson Reuters (via the Financial Times)

There was also disappointment that Germany only eked out growth of 0.1%, worse than economists had expected. The Dutch economy shrank by 0.1%.

Nick Spiro of Spiro Sovereign Strategy was also concerned:

The bottom line is that both the German and French economies, which together account for half the eurozone’s output, are in the doldrums. Add in the persistent recession in the Netherlands, which accounts for a further 6.5% of eurozone GDP, and the core and semi-core of the eurozone are in significantly worse shape than a year ago.

Italy’s new prime minister, Enrico Letta, was given an early reminder of the challenge he faces, with Italian GDP falling by 0.5%. Italy’s economy has now been shrinking for the last seven quarters, its longest recession since at least 1970.

Portugal's recession continues, with a 0.3% drop in GDP - a much smaller decline than the 1.8% slump recorded in the last quarter of 2012.

Beyond the eurozone, the Czech Republic suffered a 0.8% decline in GDP during the quarter. Eurostat’s figures also showed that the European Union shrank by 0.1% during the last quarter, despite the UK growing by 0.3%.

Figures released last week showed that Spain’s economy contracted by 0.5%.

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Meanwhile, in the UK, the Bank of England has raised its growth forecasts for Britain's economic growth for the first time since the financial crisis began.

Sir Mervyn King, who steps down as governor this summer, said a modest recovery was in sight, but cautioned that the eurozone was a key risk.

King told reporters in London that:

This hasn’t been a typical recession and it won’t be a typical recovery. Nevertheless, a recovery is in sight.

King also attacked plans for a transaction tax in the eurozone, claiming that he wasn't anyone within the European central banking world who supported it.

You can track the highlights from the BoE press conference, from 10.36am.