Gordon Brown looks set to be presiding over one of the highest levels of debt in Europe by 2010, according to a new report.

A report by the European Commission has warned that debt levels in the UK will reach as high as 60% of GDP by 2010 as the economy shrinks by “at least” 1% - the worst economic performance since 1991.

Gloomy forecasts were also made for UK employment statistics, with the prediction being that 7.1% of the workforce will be out of work in 2009, much higher than the figure of 5.7% for 2008.

Whilst the report claimed that some countries in the “euro-zone” region such as France and Germany would avoid a recession, it was claimed that Britain’s over-reliance on the housing market would put the country at an increased risk.

"This scenario is subject to downside risks relating to the length and severity of the financial market problems which remain highly uncertain but are crucial in view of the scale of household indebtedness and the typically strong growth contribution of the UK's financial sector," warns the Commission.

Joaquin Almunia, European Economic and Monetary Affairs Commissioner told the Telegraph: "The horizon that this forecast offers is dark."

Britons will have to tighten their belts as the Commission "envisages a marked fall in private consumption in 2009 and 2010 driven by more restrictive borrowing conditions and lower household wealth".

"The expected continuation of the downward correction in house prices will also weaken the collateral value of housing for secured borrowing, thus compounding the ongoing tightening for credit conditions," the Commission said.

"Private consumption will be dampened further as household spending responds to falling employment as well as to net falls in housing and financial wealth."