Latest official figures are expected to show the UK economy contracting for the first time in 16 years, thus confirming fears of a recession.

Gross domestic product (GDP) in the three months to September is predicted to show negative growth - the first in 64 consecutive quarters.

The Prime Minister, Gordon Brown, has insisted that Britain is caught up in a global crisis caused by the collapse of the sub-prime mortgage market in the US.

But the Conservatives blame a decade of spiralling debt under Mr Brown as Chancellor left the British economy more exposed that most when the credit crunch took hold.

UK GDP was last in the red in the second quarter of 1992, before the Black Wednesday plunge in the value of sterling helped boost trade and brought the economy back into the black.

Philip Shaw, economist at Investec Securities, said he believes that the initial GDP estimate will show a contraction of 0.2% and "herald the start of the recession".

Economic indicators have already shown the biggest jobless rise since 1991, with 1.79 million out of work amid warnings that unemployment could rise to three million.

Retail sales continue to decline, down 0.4% in September, with the annual growth rate now at its weakest for two and a half years.

And the housing market is also plumbing depths not seen for years, with the number of homes changing hands more than halving during the past year, HM Revenues & Customs said this week.

Manufacturing data from the CBI has also been grim, showing confidence suffering its sharpest fall for 28 years over the past three months.

Fears of a recession have now overtaken concerns over banks in financial markets, with equities globally nose-diving as readings from the major economies get ever gloomier.

Recent co-ordinated interest rate cuts across the world did little to end the volatility on stock markets and it is not thought that the 0.5% reduction to 4.5% in the UK will be enough to keep the economy from falling into recession this year.

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