The British economy will experience its biggest decline in 60 years during 2009, it has been claimed.

Weeks after the UK officially entered a recession more dire warnings have been sounded, with the economy forecast to shrink 2.7 per cent this calendar year.

At the same time, a separate survey has found the demand for staff in the UK has fallen at its fastest rate since 1997.

The Recruitment and Employment Confederation (REC) and KPMG Report on Jobs, published today, highlights a continuing downturn in employment opportunities at the beginning of 2009.

In terms of the economy overall, consumer spending will fall by 3.8 per cent this year, with public net debt to represent 70 per cent of GDP within three years, according to the National Institute of Economic and Social Research (Niesr).

Even with the boost provided by Barack Obama’s fiscal stimulus package in the Untied States, a maximum GDP growth of 0.7 per cent is forecast for 2009.

“The outlook for the UK economy has deteriorated,” said Simon Kirby, Niesr research officer. “The decline in GDP this year will probably be the sharpest of the last 60 years.

“Further interventions by governments and central banks would improve the outlook for the UK. Stimulus packages announced by the US, Canada and Japan will boost UK GDP this year. A further stimulus from [this year's Budget] would be welcome.”

On the jobs front, the REC/KPMG survey found that lower candidate appointments reflected weak demand for staff, with overall vacancy levels falling for an eight consecutive month, and at the fastest pace since October 1997.

Data from the analysis of recruitment consultancies signalled further marked reductions in permanent and temporary staff employment during January.

Average salaries for successful candidates placed in permanent jobs also fell for a fourth successive month, with the rate of decline again the fastest since data collection started in 1997. Hourly pay rates for temporary staff also fell sharply.

Commenting on the results, Kevin Green, chief executive of the REC, said: “These figures continue to cause real concern and confirm that the labour market is continuing to contract, although the decline in permanent placements is less marked than in the previous month.

“The government needs to breathe life into the jobs market, for example by harnessing the contribution of temporary work as a valuable mechanism for keeping people in employment.

“This means extending the employer incentives announced at last month’s jobs summit to take on and train temporary staff. It is also important that any steps to boost the jobs market are not undermined by potentially damaging legislation.”

In particular, Mr Green added, the government’s plans to introduce a tax on some temporary work from April “must be delayed if we are to avoid even more jobs being lost at this critical time”.