UK markets to shrink to near 30-year low

The UK economy will contract the most in almost three decades next year and house prices are now falling at the fastest pace since at least 2002, two industry reports showed.

Gross domestic product will drop 1.7 percent in 2009, the most since 1980, the Confederation of British Industry, the UK's biggest business lobby, forecast in a report. The average asking price for a home fell 7.1 percent from a year earlier, the most since records began six years ago, Rightmove Plc, the country's most-used property website said yesterday.

Bank of England Governor Mervyn King said last week that Britain is probably already in a recession, a week after policy-makers cut the benchmark interest rate by 1.5 percentage points, the most in 16 years. The pound fell to a record low against the euro as investors bet the economy's deterioration will intensify.