So it's official: the UK has been in recession since the beginning of July last year.

In the final quarter of the 2008 calendar year, gross domestic product (GDP) fell by 1.5%, the steepest quarter-on-quarter fall since the recession of the 1980s.

Analysts are predicting two or three further quarters of negative growth, with worst estimates saying the economy will not recover until 2010. The financial year 2008-09 will be one of the worst on record.

The problem for the UK economy is now manifold: overseas investors see a weak pound, which has fallen back rapidly from its overvaluation last summer. Similar things have happened to the banking sector, which had ballooned massively relative to the rest of the economy and is now propped up by government loans and part-ownership.

Unemployment is pushing two million, and if the recession lasts through the autumn, could begin to hit levels not seen since the dole queues of the early Thatcher years. What manufacturing base we have is in rapid decline once again.

The key question, then, is what will the future UK economy look like? The problem is that since the 1980s it has been built on the services sector and lacks significant diversity elsewhere. If the services sector is now taking the full force of the storm, then how will a rebuilt economy sustain itself later?