The British Chambers of Commerce (BCC) has warned that Britain is already in a recession, which is worsening and could see unemployment rise by 350,000 by next year.

A quarterly survey of 5,000 businesses says confidence is at an all time low in both manufacturing and service sectors. The companies call for urgent action from the government and the Bank of England.

Technically, the UK is not in a recession – defined as two quarters of negative economic growth. However, the BCC said that the survey results were “exceptionally bad” and said the economy was under “immense pressure” for the second quarter in a row.

The BCC believes the number of people out of work will rise by between 300,000 and 350,000 over the next year or two, which would take the unemployment total to more than two million.

The BCC represents small to medium sized companies, and argues that a recession has already begun. It wants the Bank of England to do what it can to stimulate the economy, by cutting interest rates on Thursday.

“We are clearly in a very difficult economic period but it is important that we retain a sense of proportion,” said BCC Director-General David Frost.

“Many parts of the business community continue to perform well. The government needs to say that business taxes will be cut.

“The Bank of England needs to cut interest rates immediately and politicians need to get behind our businesses in these challenging times.”

The BBC’s business correspondent Nils Blythe says the idea of a rate cut is now supported by the majority of city economists, in spite of rising inflation.

The results of the survey come a day after the FTSE 100 fell 391.1 points, or 7.85 percent, to close at 4,589.2.

This meant that the UK’s top share index saw its biggest ever one-day points fall, wiping £93.4bn off the value of the index’s shares.