Recession looms in the UK in the next six to nine months as firms face "a difficult and risky climate", the British Chambers of Commerce warns.
UK growth will be slightly negative or zero in the next two or three quarters, but a major recession is unlikely, the BCC says in its latest forecast.
But prospects will be worse if interest rates are not cut soon, it adds.
The BCC predicts UK unemployment will rise by between 250,000 and 300,000 in the next 18 months to two years.
That could take the jobless total to more than two million for the first time since Labour came to power in 1997.