"The global financial crisis and the associated credit crunch have brought an end to the period of easy credit that in recent years has been the bedrock of rapid rises in house prices," said Roger Bootle, Deloitte's economic adviser. A prolonged period of economic downturn may also force employers to "wield the axe more sharply", the report said.

Deloitte, a global auditing and financial services company, expects the British economy to grow by 2% this year and by a slightly smaller margin in 2009 - down from 3.2% in 2006. Deloitte said Britain would not be bailed out of its downturn by another major economy, saying it expects US growth to slow to zero in the first half of this year.

Europe, which is Britain's biggest export market, will remain relatively strong but will not be able to offset a downturn. Neither, it said, will India and China be able to help Britain as the two countries buy less than 5% of British exports.

The Deloitte report brings mixed news for India.

Finance Minister P Chidambaram told a meeting in Davos last week that his hunch was that the US economy will probably slow down, growing at 1 to 1.5% for the next two to three quarters before bouncing back. Any slowdown in Britain too will affect India. The trade in goods in alone was worth £4.4 billion last year, with the balance of trade slightly in favour of India. British imports of Indian goods were worth £2.5 billion, while its exports to India amounted to £1.9 billion.

The news that the European economy will remain relatively strong should bring some cheer to corporate India. Chidambaram told the World Economic Forum that the Indian economy could be affected if the turmoil in the US affects Europe.

The Deloitte report forecasts that the British base rate will fall to 4 % in 2009 from 5.5 % now.