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Out year deficits are higher than originally projected due to deeper contraction this year and shallower expected recovery.
The manufacturing sector PMI dropped to 44.1, from 45.1 in June, showing a deeper contraction (partly due to a weak performance from Germany - see 8.40am).
That was followed by a deeper contraction in the first three months of 2012 than initially reported, down by 0.5% compared with the previous estimate of 0.2%.
The government said last month that GDP shrank at a 1percentt annual rate, and economists say data since then imply a much deeper contraction.
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It slashed its forecasts for economic growth, predicting deeper contractions in the UK, Spain and Italy.
Japan, in particular, is in trouble, with economists projecting the first quarter of this year would show another deep contraction.
Because of population increases, with the exception of periods of deep contraction, there is almost always a record number of people in work.
Our findings mirror those of other recent surveys, suggesting there will be further deep contraction in UK economic output in coming months".
And exports of goods and services declined 3.2 percent, the deepest contraction since Ireland fell into its crisis in 2009, the government reported.
Anthony Valeri, an investment strategist for fixed income at LPL Financial, said the latest data pointed to a "deep contraction" in the European economy.
Instead of pursuing measures to counter excessive fluctuations in economic activity, such as the deep contraction of the 1930s, so-called stabilisation policies focused on measures that aimed to maintain full employment.
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