British business confidence is at a two-year low amid fears that 2008 could prove to be the toughest since economic downturn at the start of the 1990s.

The Bank of England has revised its growth expectations for 2008 from 2.8% to 2.2% while the Institute of Chartered Accountants of England and Wales revealed its measure of business confidence had slipped from a score of +4.8 to -3.9.

“Although it is too early to judge the full impact of tighter credit conditions on the real economy, negative business confidence in most sectors and broadly across regions indicates a slowdown is on the horizon,” said Michael Izza, chief executive of the ICAEW.

“Business is in for an uncomfortable ride over the coming 12 months,” he added.