The UK economy could decline for another year and take a further two years to recover

A National Institute of Economic and Social Research study says the current economic decline is "very similar" to the slowdown at the start of the 1980s.

The latest estimate predicts a 1.5% decline in the first quarter of 2009.

In a separate study by Nationwide, UK consumer confidence fell in March as worries continued about jobs.

The building society's consumer confidence index dropped two points to 41.

The Bank of England's Monetary Policy Committee (MPC) begins its latest interest rate-setting meeting on Wednesday, with its decision due to be announced at midday (1300 GMT) on Thursday.

The MPC is not expected to cut the Bank rate further from its current record low of 0.5% having cut the rate six times since October in attempt to boost the economy.

Jobs market

UK unemployment recently hit two million for the first time since 1997.

Nationwide said consumer confidence was "broadly stable since the start of the year, but feelings about the current labour market have weakened".

"Further reports of job losses are likely to have affected consumers' views of this," the report said.

Nationwide said consumers' confidence fell for the ninth consecutive month in March.

The building society's survey came as a report from the Recruitment and Employment Confederation/KPMG showed little sign of a strong recovery in the number of permanent jobs available in the UK.

Although its "permanent placements indicator" rose to 33.5 in March from 30.3 in February, that was still well below the 50 level, where growth begins.

"These latest figures leave no doubt that the UK jobs market is at its worst in the 11-year history of the survey and recovery might take longer and be more protracted than many hope," said Mike Stevens, partner and head of business services at KPMG.

However, the Nationwide's survey of 1,000 consumers indicated that they had became more optimistic about UK economic conditions.

"Increased optimism towards the current and future economy is encouraging," said Nationwide's Fionnuala Earley.