More than one call that Britain is now in recession

The Ernst & Young Item Club will warn that Britain's recovery is being "paralysed" by the European debt crisis as it slashes its 2012 GDP growth forecast from 1.5% to just 0.2%.

After a brief respite over Christmas and the New Year, fear returned to world stock markets again on Friday as the credit ratings agency Standard & Poors downgraded nine European countries, with France and Austria losing their coveted AAA ratings.

British economists had hoped that with public and consumer spending in the doldrums, exports and investment by businesses would power the UK's economy this year.

However, Europe accounts for more than 40% of British trade and the ongoing uncertainty about the continent and its currency has smashed business confidence in the UK.

The ongoing anxiety has deterred many companies from hiring staff or spending on goods and services. Telegraph