The British economy will enter into a "technical recession" before the year is through, the British Chambers of Commerce (BCC) has warned.

Coming the week after Bank of England governor Mervyn King warned that the UK is facing a "difficult and painful economic adjustment", the latest report from the BCC points to a recession kicking in "over the next six or nine months".

Furthermore, it is expected that unemployment figures could grow by 300,000 over the next couple of years to hit the two million mark, though the overall slowdown is unlikely to be as pronounced as that seen at the start of the 1990s.

David Frost, director of the BCC, reaffirmed his belief that the Bank needs to cut interest rates in order to stimulate the economy, arguing halting the decline is more important than curbing inflation for the time being.

"Whilst a marked slowdown in activity is likely over the next 18 months, even if interest rates are cut when inflation peaks, the correct policy decisions are still needed to ward off the threats of a serious and prolonged recession," he said.

"The longer the MPC waits before cutting rates, the bigger the danger that the economic situation would deteriorate."