Nokia, the world's largest maker of mobile phones has reported a sharp drop in profits in 2008 and predicted that the coming year would be equally difficult.

The company reported that operating profit for the year dropped from €7.9bn in 2007 to €4.96bn for 2008.

The Finish firm controls around 40% of the global market for mobile phones, and the company's health is regarded as a good indicator for the wider economy.

Nokia have predicted that its 2009 sales will drop by twice as much as previously thought to 10%.