The economy is likely to shrink by 0.9 per cent over the course of 2009 and suffer the first full year of recession since 1991, according to the latest quarterly forecast from the National Institute of Economic and Social Research.

Moreover, there was a one in three chance the recession could stretch on longer than that, as demand was further hit by banks scrambling to withdraw credit from over-extended consumers, said Simon Kirby, economist at NIESR.