It also predicts a decline in the consumer spending and a slump in all forms of business investment. The forecasters also predict that the exporters will be helped by the fall in the pound’s value, however, their projection shall be held back by a global slowdown.

According to the CEBR’s research, the economy will contract by its biggest amount after the year 1946 where in the country was in the clutches of mass demobilisation after the wars. They also added that the economy is going through an agonizing readjustment as the consumers cut down on the spending because of ever increasing unemployment.

However, the biggest threat according to them would be a predicted collapse in the business sector investment of approximately 15% as the firms will have to struggle to get finances. A range of analysts have made a predicted fall of 2.5% in the GDP next year and the CEBR managing economist confirmed that things could get even worse. He also added that if the business investments were cut at the same time as consumers reigned in their spending then there shall be a contraction between 5% and 10%. This could effortlessly set the UK economy back by five years.

Previously this week, the official statistics confirmed that the UK economy is descending towards the recession faster than it actually appears. All the revised data concluded that there was a 0.6% decrease in the output from July to September which is worst ever since the 1990s. It is also bigger than the 0.5% fall estimated by the ONS (Office for National Statistics).

In UK, Dresdner has considerable operations and this move will cause 9,000 job losses in which around 1000 positions to be cut in the UK.

Recently, Dresdner had suffered a lot of loses because of the sub-prime crisis and to cover further loses Commerzbank and Allianz are contributing 1.25bn euros.

The deal seems to create a real rival for Germany’s Deutsche Bank, which is country’s largest bank.

In terms of the customer numbers, the new combined group would be the biggest bank in Germany, but in terms of assets it would be at a considerable distance to Deutsche bank.

Almost 30% stake of Dresdner will be kept by Allianz and the procedure will consist of two-step transactions that involve of cash as well as stock.   The deal will be finalized by the end of 2009.

According to Germany’s finance minister Peer Steinbrueck , the purchase of Dresdner by Commerzbank would benefit the country.

“It’s good for the country not only as a business location but also as a financial centre,” said Torsten Albig, Steinbrueck.’s spokesman.

The deal would help Commerzbank to expand in Germany as well as in abroad.

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Darling also admitted that voters were not happy with Labour Party’s handling of the economic issues.

George Osborne (Shadow chancellor) said: “after Darling’s confession, the cat is no more in the bag about the state of the economy.”

Darling acknowledged that the government had clearly failed to get across its message that it realized people’s concerns about increasing job insecurity and rising cost of living.

“Voters are pissing off the Labour’s handling of the economy and it is, indeed, a key issue at the next election, and ministers must communicate their intentions better. The coming 12 months will be quite difficult for the Labour party”.

When it was asked that why he had been so frank, he told: “I want to tell people in this country that like every other country in the world; we are also facing a unique set of economic circumstances.”

He further added, “There is a difference between the current and the past government as this current government is prepared to take action to help people and to help the economy getting through this difficult period.”

He said the tax rebates due at the end of next month and rescue package maintained for Northern Rock are some examples to prove support that offered by the government.

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The Pound hits its minimum level and this fall is observed since July2006.

“The growth number confirmed our worst expectations,” said John Hydeskov analyst at Danske bank in Copenhagen.

Also there is rapid fall in the house prices in UK that seems to have no end, he further added.

A rapid fall in the Euro value against dollar is also seen in the last week.

The fall in the value of pound will discourage the tourists to UK that were attracted by strong pound value.

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