Fears of deep and prolonged UK recession intensified yesterday with revelations that service sector activity tumbled last month at the fastest pace since comparable records began 12 years ago.

Fears of deep and prolonged UK recession intensified yesterday with revelations that service sector activity tumbled last month at the fastest pace since comparable records began 12 years ago and that manufacturing is suffering its most sustained contraction since 1980.

Amid the latest woeful economic news, the clamour for a big cut in benchmark UK interest rates today grew much louder.

The worrying economic signals also weighed on the UK stock market. The FTSE-100 index of leading shares ended a run of six straight sessions of gains by finishing 108.77points lower at 4530.73.

The Bank of England's Monetary Policy Com- mittee will pronounce at noon today. Economists expect UK base rates to be cut by at least half-a-point from their current level of 4.5%, with a significant minority predicting a cut of either three-quarters-of-a- point or a full point.

Accountancy firm Ernst & Young's ITEM Club think-tank, which uses the Treasury's forecasting model for the UK economy, called yesterday for a full-point cut. This call was echoed by the Scottish Chambers of Commerce and Scottish housebuilder Mactaggart & Mickel.

The Chartered Institute of Purchasing and Supply said yesterday that its business activity index for the UK services sector plummeted from 46.0 in September to 42.4 last month - the lowest since this survey began in July 1996.

The October reading is way below the level of 50 which separates expansion from contraction.

Companies in the hotels and restaurants category fared particularly badly, and financial intermediation also registered a significant contraction as the credit crisis raged on.

Service sector employment tumbled last month at the fastest pace in the history of CIPS' survey.

The rate of incoming new business for service companies also fell at the quickest rate on record.

CIPS' survey showed inflationary pressures continuing to ease in the service sector. The increase in prices charged by service companies slowed very sharply to its weakest pace since February 2006, as firms experienced a rapid deceleration in the rate of increase of their input costs.

The UK manufacturing sector suffered its seventh consecutive monthly fall in output in September, the longest run of decline since December 1980, data from the Office for National Statistics showed yesterday.

Comparing the July to September period with the preceding three months, manufacturing output fell by 1.3%. This was the worst quarterly fall in manufacturing output since the fourth quarter of 2001.

Manufacturing output dropped 0.8% during September alone - its biggest monthly drop since February 2007 and double the 0.4% decline predicted by the City. It was 2.3% lower than in September last year - the greatest year-on-year decline since May 2003.

Industrial production, which takes in mining and quarrying, oil and gas extraction, and electricity, gas and water supply as well as manufacturing output, fell by 0.2% during September.

This fall in industrial production would have been worse had it not been for a 9.3% leap in oil and gas extraction during September - the biggest monthly rise since June 1991 as output rebounded from weakness in July and August caused by routine maintenance work. The City had predicted a 0.3% fall in industrial production last month.

Industrial production in the July to September period was 1.1% weaker than in the preceding three months - the worst quarterly drop since the third quarter of 2004.

Howard Archer, chief UK economist at consultancy IHS Global Insight, said yesterday: "Record contraction in service sector activity in October and a deep fall in manufacturing output in September heighten already very serious concerns about the potential length and depth of the UK recession and intensify pressure on the Bank of England to deliver a deep cut in interest rates on Thursday."

The MPC cut UK base rates by half-a-point on October 8, co-ordinating this action with other major central banks around the world. It has never cut by more than half-a-point in a single stroke since being granted independence in setting interest rates in 1997. UK base rates have not been cut by more than half-a-point in one move since 1993.

Hetal Mehta, senior economic adviser to the ITEM Club, said yesterday: "ITEM believes that the MPC must cut the base rate of interest by 100 basis points, taking it from 4.5% to 3.5%. Anything less than that would be a case of too little, too late."

Noting the 0.5% fall in UK gross domestic product during the third quarter was "a much steeper fall than anticipated", she added: "The weakness in the economy is disturbing And things will get worse before they can get better."

Liz Cameron, chief executive of Scottish Chambers of Commerce, also called yesterday for at least a full-point cut in UK base rates today.

She said: "There is now clear evidence that the UK economy is shrinking, and Scottish businesses are not immune from the effects of the economic downturn and the credit crunch. The government has taken action to boost the liquidity of the banking sector and it is now vital that the Bank of England backs this up with a further bold reduction in the base rate.

"Scottish firms are looking for a clear message that the Bank of England understands the current pressures upon business and is prepared to act courageously and decisively to ensure that we are well placed to weather the economic downturn and emerge stronger, fitter and more competitive."

Andrew Mickel, director of family-owned housebuilder Mactaggart & Mickel and chairman of industry body Homes for Scotland, said: "Negative growth will temper rising inflation so the MPC now has the opportunity, and responsibility, to help thaw the (housing) market with a decisive further cut of one (percentage point)."

He added: "We need to see the politicians' rhetoric that banks be directed to lend at sensible levels turned into real action for the benefit of the real economy.

"In the meantime, last month's 0.5-point base rate cut still looks like too little too late - it didn't bring any warmth to the market and the interbank LIBOR rates are keeping the freeze on high street mortgages and company credit. Christmas is not far away and consumers need reassurance that the economy will be protected from a winter of discontent."