In the latest grim forecast for recession-hit Britain, the CBI business group also believes the economy will shrink by 3.3 per cent in 2009, far more than its forecast of 1.7 per cent made in November, and not recover until 2010.

Government borrowing to increase public spending will jump from 88.7 billion pounds in 2008 to 148.7 billion pounds in 2009, or 10.6 per cent of gross domestic product (GDP), the CBI said.

By 2010, it would hit 168.1 billion pounds (11.8 per cent) - putting the public finances in the worst state since the end of the second world war, according to the Financial Times business daily.

'You would have to go back a long way before you found a deficit as high as 10 per cent of GDP,' said CBI chief economic adviser Ian McCafferty.

The figures are far worse than laid out in finance minister Alistair Darling's preliminary budgetary report in November, when he forecast borrowing of 118 billion pounds for 2009, and a fall to 105 billion in 2010.

Mr McCafferty blamed a 'dramatic and global change in conditions' in recent weeks for the worsening outlook.

Mr Darling also said he expected growth to resume by mid 2009, but the CBI does not expect recovery until 2010.

'Given the rapid contraction in global economic activity and the continuing credit squeeze, we believe the UK will be mired in a deep recession for the whole of 2009, lasting six quarters in total,' Mr McCafferty said.

This would be accompanied by a 'significant rise' in unemployment to just over three million by early 2010, the CBI said. The latest official figures put joblessness at 1.97 million, or 6.3 per cent, in the three months to December. -- AFP