LONDON (AP) — Britain's retailers suffered their worst December in at least 14 years while the wider economy experienced a "frightening deterioration," business leaders said yesterday.

In its monthly assessment of the sector, the British Retail Consortium said like-for-like retail sales, which strip out new stores and space, slumped 3.3 percent in December from the previous year. Total sales, which includes the additional space, fell by 1.4 percent.

The like-for-like decrease was the seventh in a row, while the total fall was the third, and fuelled talk that the recession will cause more retailers to collapse. Woolworths has already closed its doors for good while others, such as tea and coffee merchant Whittard of Chelsea and Land of Leather have filed for bankruptcy protection.

The consortium said this was the worst December since the survey began in 1994 and barring distortions associated with the timing of Easter, the worst month of all. Only food and footwear stores reported higher sales.

Even with heavy discounting, consumers remained reluctant to part with their cash amid mounting unemployment fears and heightened personal debt levels.

Separately, the British Chamber of Commerce, a leading business lobby group, said the deterioration in the British economy at the end of 2008 was "frightening" as it unveiled its worst quarterly survey since it began in 1989.

The BCC forecast that unemployment would rise to a peak of 3.1 million over the next two years, or around 10 percent of the workforce. At the end of October, unemployment in Britain stood at around 1.8 million.

"These are truly awful results with the scale and speed of the economic decline happening at an unprecedented rate," said David Frost, the BCC's director-general.

Amid the mounting gloom, there was some good news. Tesco, Britain's biggest supermarket chain, said it expected to recruit 10,000 staff over the coming year, even though it conceded that trading over Christmas was probably the worst since the last recession in the early 1990s.

Despite that assessment, Tesco posted a respectable 11.6 percent increase in sales in the seven weeks to January 10, largely as a result of its international expansion and modest growth in Britain.

The problems afflicting Britain's consumer sector were further highlighted in monthly housing survey from the Royal Institution of Chartered Surveyors, or RICS and the government's Department of Communities and Local Government, or DCLG.

RICS said the average number of home sales per chartered surveyor in England and Wales fell to a record low of 10.1 in the three months to December despite another big interest rate cut from the Bank of England, while the DCLG said house prices fell by a record 8.6 percent during the year to the end of November.

Elsewhere, official figures showed that the sharp fall in the pound over recent months did not help exporters during November as the credit crunch continued to depress global demand.

The Office for National Statistics said a 5.8 percent decline in exports during the month was the main reason why the trade deficit swelled to a record high of £8.3 billion ($12.2 billion).

"With the external sector so weak, policymakers will need to do much more to stimulate domestic activity," said Paul Dales, an economist at Capital Economics.

The market currently thinks the Bank of England will cut its benchmark interest rate to, or close to, zero from the current 1.5 percent amid the economic gloom and falling inflation.

Meanwhile, the government was reportedly considering a plan to guarantee up to £20 billion of loans to small businesses to help them get through the recession. According to the BBC, the government would insure banks against firms defaulting on their loan payments in return for a fee. An announcement could be made as soon as today, the report said.