The Office for National Statistics (ONS) says updates to its past calculations on the performance of the UK economy mean Britain was never in a double-dip recession after all.
Revised GDP data showed that output was actually flat in the first three months of 2012 - rather than shrinking as had first been measured - meaning there was no second recession.
The ONS credited a stronger contribution to growth from the construction sector.
But that was where the good news ended for the Chancellor George Osborne as there were downgrades to other key economic indicators.
The ONS said the original recession in the wake of the financial crisis was deeper than had been previously found, with growth contracting by 7.2% instead of 6.3%.
The body said that output was now 3.9% below its pre-recession peak - again worse than previously reported.
While growth in the first three months of 2013 was unrevised at 0.3%, the year-on-year growth estimate was unexpectedly halved to 0.3%.
A more detailed breakdown of the data also showed the pressures faced by consumers as real household spending plunged by 1.7% in the first three months of 2013 - the largest drop for 26 years.
Consumers were hit by falling wages and rising inflation, according to the ONS.
Business investment also fell, by 1.9% quarter-on-quarter to £27.3bn.
However, the recovery is expected to pick up in the second quarter, with GDP forecasted to grow by 0.5%, although economists say it remains possible that incoming governor of the Bank of England, Mark Carney, may choose to follow Sir Mervyn King in backing more quantitative easing to boost money in the economy.