'Recession within a year'

Business leaders have predicted Britain's economy will enter a recession in the coming year.

In its latest quarterly economic forecast, the British Chambers of Commerce (BCC) said there will be two or more quarters of declining output over the next six to nine months.

It forecast that unemployment will climb by up to 300,000 over the next two to three years and could top the two million mark if conditions deteriorate.

But a major slump similar to the downturn in early 1990s was unlikely, the organisation said.

David Kern, the BCC's economic adviser, said: "Our quarterly economic forecast highlights a significant worsening in UK economic prospects. There is now a distinct possibility of technical recession.

"The level of UK unemployment is likely to increase to nearly 300,000 over the next few years, reaching almost two million. An increase above two million cannot be ruled out."

The slowdown will be triggered by a "very sharp" deceleration in consumer spending growth as households tighten their belts amid soaring bills and falling house prices, the BCC said.

Another factor will be lower growth in UK investment spending thanks to falling business confidence.

Last week Bank of England Governor Mervyn King also warned the economy could suffer two quarters of negative growth as it went through a "difficult and painful adjustment".

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