Experts predict deeper recession
Experts from Standard Chartered Bank said the economy had already begun to shrink, and would continue to falter until at least halfway through next year.
"The UK has already slipped back into recession this quarter. So much so that growth of only 0.6% in 2011 may be followed by a contraction of 1.3% in 2012."
He put the gloomy outlook down to the squeeze on incomes and people's lack of spending because of their need to repay debt.
"Firms are thinking twice about investing and laying off workers, while Europe's recession will dent export prospects," he added.
He said Britain, although vulnerable, was in a better situation than Europe.
The bank predicts that the economies of the eurozone countries will see a contraction of 1.5% as they struggle with debt problems.
Mr Lyons said there would be a "two-speed world where a fragile West contrasts with a resilient East."
© 2011 Press Association