The UK is already in recession and may be facing a prolonged downturn, the British Chambers of Commerce (BCC) has warned.

Confidence among companies fell to its lowest on record in the third quarter as sales and orders tumbled for manufacturers and the service sector, the BCC's quarterly survey of more than 5,000 businesses showed.

The business group has called for an immediate half-point cut for interest rates ahead of Thursday's decision by the Bank of England's Monetary Policy Committee.

Economic advisor to the BCC, David Kern, said: "Overall, the alarming third quarter results point to worsening dangers of major economic downturn and rising unemployment.

"The results support the view that a UK recession has started and the downturn is getting worse. The domestic economy is under immense pressure."

There are two main definitions of a recession, although experts are split over which is the most accurate.

The most widely-used is where there have been two or more consecutive quarters of falling gross domestic product (GDP). An alternative is where a full calendar year of negative output means a recession.

In the UK, the worst recessions since the Second World War II were in 1974, 1975, 1980, 1981 and 1991. The biggest post-war fall in annual GDP was recorded in the 1980 recession, when it dropped by 2.1 per cent.

In the last recession the UK experienced, in 1991, the economy shrank in three consecutive quarters and annual GDP fell 1.4 per cent compared to the previous year.

Stephen Alambritis of the Federation of Small Businesses (FSB) said: "The word 'recession' is not a nice word.

"What we are saying is that these are very difficult times, testing times, challenging times, and it behoves everyone (to help) - large companies to pay on time and the banks to behave themselves and not to hike up their charges.

"There's too much pandering to banks, I believe."

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