The economic downturn will be deeper than previously thought this year and the recovery will be muted, the British Chambers of Commerce said on Monday.

According to the lobby group's latest forecasts, the economy will contract by 2.8 percent this year, markedly worse than its January prediction for a decline of 2.2 percent, and driven by sharp falls in consumer spending, investment and inventories.

Britain's economy shrank by 1.5 percent in the three months to December 2008, its fastest rate since the 1980s.

The BCC said it expected the cumulative decline in GDP in the current recession to come in at 3.7 percent, much more severe than the 2.5 percent recorded in the recession of 1992-1993.

And it revised down its growth forecast for 2010 to 0.8 percent from 1.1 percent in January.

It also said it expects unemployment to hit 3.2 million in the second half of 2010, or just over 10 percent of the workforce, higher than its January forecast of 3.1 million.

(Editing by Ron Askew)