The UK economy contracted 1.8% between December and February, the National Institute of Economic and Social Research (NIESR) has estimated.
The level of economic activity is now 4.3% below its peak of April 2008, according to NIESR's data.
The think tank praised the Bank of England's policy of quantitative easing but said it did not go far enough.
Focusing more on supporting the market for corporate debt would help businesses directly, the NIESR said.
The Bank of England will launch its quantitative easing scheme later.
It will offer to buy up to £2bn of government bonds to help boost the supply of money and stimulate the economy.
The Bank said it would expand the amount of money in the system after cutting interest rates to an all-time low of 0.5%.
Reduction in stock
The 1.8% fall in GDP was slightly bigger than the 1.7% drop seen in the three months to the end of January, according to NIESR's estimates.
The level of economic activity has now fallen back to that in August 2006, the think tank said.
It said the economy was experiencing a sharp reduction in stock levels and weak demand for manufactured goods.
It warned that the contraction is likely to slow only when businesses have reduced their stock holdings to desired levels.
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