Global stock markets have seen their biggest fall since 9/11 as fears grow that the US is heading for recession.

The FTSE fell by 5.5% on 21 January, with Asian and European markets also tumbling, as the fallout from the global credit crunch continues.

The falls were prompted by fears that a package put together by the US to stimulate the economy through £76bn worth of tax cuts would not be enough to prevent recession.

The stock market turbulence could increase the risk of profit warnings and job losses in the UK, which could drag the economy into a full-on recession.

Concern over the health of the US economy will increase the pressure on the Bank of England to reduce interest rates next month.