* British Chambers of Commerce warns recession will be worse than early 1990s
* Retailers report worst December in BRC survey's history
* Government to launch help for small firms on Wednesday
* Tesco reports lowest Christmas sales rise since early '90s
(Updates with details on government lending package)
By Christina Fincher
LONDON, Jan 13 (Reuters) - Britain's economy went into steep decline at the end of last year with retailers suffering the worst December on record, businesses slashing jobs and home sales slumping to another low, surveys showed on Tuesday.
The British Chambers of Commerce (BCC) urged government to take "additional forceful corrective measures", warning firms were facing the toughest conditions in more than two decades.
The surveys were published as the government prepared to launch measures to help small and medium-sized businesses refinance up to 20 billion pounds of existing loans to prevent credit starved companies from going bust.
The BCC said its quarterly economic survey showed a "frightening deterioration" at the end of last year as sales, orders, investment, employment expectations, cash flow and confidence fell at the fastest pace since its survey began in 1989. [ID:nLC474952]
"These are truly awful results with the scale and speed of the economic decline happening at an unprecedented rate," said David Frost, BCC Director General. "Since October, things have really fallen off a cliff."
The British Retail Consortium said retail sales fell last month at their fastest pace for a month of December since its records began 14 years ago. [ID:nLAG003182].
And Britain's biggest retailer Tesco
"Against the overall background of, I suspect, rising unemployment and economic slowdown it will be a tough year," Finance Director Andrew Higginson told Reuters.
SEVERE DOWNTURN
Pressure is mounting on the government and Bank of England policymakers to do much more to stave off a severe downturn, but fears are growing that the authorities may not have the means at their disposal to stop the rot just yet.
An industry source said the government's package could include loan guarantees worth 20 billion pounds ($29.23 billion). Pressure is also growing on it to find another large sum of cash to stimulate the economy in this year's budget. [ID:nLD303461]
A 20 billion pound stimulus package announced in November is starting to look inadequate. Interest rates have been slashed to a record low of 1.5 percent, but the Bank of England has been criticised for not starting to cut rates until October.
A bleak set of trade figures for November also showed exporters were little aided by the weaker pound, with Britain's global trade deficit widening to the largest level since records began in 1697. [ID:nLD150954]
"Yet more bad news," said Alan Clarke, an economist at BNP Paribas. "Alongside the hard data on activity, the trade figures reinforce expectations that we are going to see an horrific contraction in GDP in the fourth quarter."
HOME SALES SLUMP
A survey from the Royal Institute of Chartered Surveyors showed the pace of decline in British house prices eased slightly in December, but sales hit a record low and the proportion of unsold houses rose to its highest level since 1992. [ID:nLC350831].
Separate government figures showed house prices in Britain
fell 8.6 percent on the year in November [ID:nHOC000094], while
housebuilder Taylor Wimpey
Britain's economy has been particularly hard hit in recent months as banks around the world have reined in lending to repair overextended balance sheets.
Standard & Poor's Ratings Services affirmed its top AAA credit rating for Britain with a stable outlook, even though it expected GDP to fall by two percent next year.
Analysts expect British interest rates will fall close to zero in the coming months, shifting attention to what can be done once conventional monetary ammunition has been used up.
A poll for the Times newspaper showed the prime minister has lost some of the poll boost that followed his handling of the economic crisis last year.
The Populus survey put Brown's ruling Labour Party down two points on last month at 33 percent, with the Conservatives up four points at 43 percent. An election is due by May 2010. (Additional reporting by Matt Falloon, David Milliken, Mark Potter and Peter Griffiths, editing by Mike Peacock)