New forecasts suggest 4.3% contraction in GDP this year before recovery starts in 2010

The recession in the UK could be the worst the nation has suffered since the early 1930s, new research has predicted.

The National Institute of Economic and Social Research said that Britain's GDP could contract by as much as 4.3% in 2009, before recovery begins in 2010 with growth of 0.9%.

The forecast comes despite reports from Nationwide that UK consumer confidence saw its biggest rise in two years last month, with the index rising to 50 in April from 42 in March - the largest monthly improvement since May 2007.

The government has predicted that the economy will shrink this year by 3.5% then grow by 1.25% in 2010, but a committee of MPs has criticised these forecasts as too optimistic.

The Treasury Committee said in its report on the Budget that it was very concerned about the state of the public finances.