The downturn is mainly attributed to the housing market, with prices expected to plummet by around five per cent this year and by eight per cent in 2009.
The Deloitte Economic Review has predicted the UK economy will experience the weakest period of growth in 15 years.
Borrowing is set to become more difficult.
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Roger Bootle, Deloitte's economic adviser, said: "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."
A prolonged economic downturn may also force employers to "wield the axe more sharply", the report said.
Other markets worldwide are unlikely to rescue the UK, the European market will remain "relatively strong" however it may be offset by a US slowdown.
Relatively benign inflation may help prevent a UK recession allowing monetary policymakers the chance to cut interest rates.
Deloitte forecasts that the UK base rate will fall to 4 per cent in 2009 from 5.5 per cent now.
(GK)
