Britain set for deeper recession than early 1990s

By Christina Fincher

LONDON (Reuters) - Businesses in Britain are facing their toughest conditions in more than two decades, the British Chambers of Commerce warned on Tuesday as it urged policymakers to do more to support the economy.

It said a survey of almost 6,000 firms showed a "frightening deterioration" towards the end of last year as sales, orders, investment, employment expectations, cashflow and confidence deteriorated at the fastest pace since the series began in 1989.

"These are truly awful results with the scale and speed of the economic decline happening at an unprecedented rate," said David Frost, Director General of the British Chambers of Commerce. "Since October, things have really fallen off a cliff."

The BCC was one of the first groups to forecast a recession last year and the depth and breath of its survey makes it a closely watched barometer for the state of the economy as a whole.

The fourth-quarter domestic sales balance for service companies fell 24 points to a record low of -31 while the domestic balance for manufacturing firms dropped 25 points to a record low of -38.

Orders from overseas were also weak, suggesting the pound's recent decline has done little to offset a sharp drop in global demand.

UNEMPLOYMENT TO SOAR

The employment expectations balances declined to their lowest ever recorded, adding weight to the British Chambers of Commerce's forecast that unemployment will rise to more than three million by mid-2010.