Together with my colleagues at Business Monitor International, I have just put the finishing touches to a report titled Britain On The Brink: UK Economy Sliding Out Of The Global Premier League. Our forecasts are amongst the most bearish yet published:

• Britain will suffer a far deeper recession than either the UK Treasury or IMF predicts. GDP is forecast to contract by 3.5% in 2009, followed by a shallow 0.2% recovery in 2010. Unemployment will peak at 3.2 million next year, an 11.2% rate, with the financial services sector set to lose 570,000 jobs between 2008 and 2010.

• Sterling’s steep depreciation is the principal factor behind Britain’s fall in the league tables; the pound will remain weak for the next three years, dragged down by recession, huge budget deficits, low interest rates and increasing political risk.

• Despite enjoying 11 years of strong growth between 1997 and 2007, the UK ran a budget deficit of 1.7% of GDP over this period, fuelling a fiscal time bomb. Faced with the financial burden of bailing out the banking sector and kick-starting the economy, the budget deficit will swell to an unsustainable 9.3% of GDP in 2009, and average 6.7% over the following four years.

• Property prices will see a cumulative fall of 41%, from peak to trough, and could take more than 10 years to recover to the levels of 2007. The impact of negative equity and declining asset values will further serve to depress consumer spending and economic growth.

All in all, our analysis paints a very bleak picture for the UK economy, with the country likely to see its GDP per capita fall from the 12th highest in the world in 2007 to 21st by 2010. A rebound to 17th slot is forecast by 2013, but a break back into the top dozen looks to be a distant prospect at present.