Snow followed by a sweeping band of rain is forecast for Monday. But those trudging back to work for the first time this year under louring skies may feel an additional chill should they pass a branch of Woolworths.

The last of the stores will close on Monday evening – a symbol of how the downturn is darkening, from going to gone, from bargain to bust.

After a Christmas holiday that was celebrated in a spirit of defiance, a bleak reality of job losses, plunging house prices and a brutal cull of businesses is waiting for millions on the other side of this weekend.

Woolworths’ 27,000 workforce will join a dole queue that breached the million mark last month and is now growing at its fastest rate since 1991. Yesterday came the news that the Halifax survey of house prices recorded its biggest annual drop last year since it started keeping records in 1984.

Sensing the shift in mood, David Cameron, the Conservative leader, criticised the Government’s VAT cut as “one of the most appalling wastes of money in British political history”. He said that Gordon Brown’s bank recapitalisation, praised by a leading economist in the autumn, had failed.

Worse than expected lending and retail figures have added to a creeping sense of ministerial impotence. Despite intense pressure, banks curbed the availability of loans to consumers and businesses further in the final quarter of last year. The Government’s failure to win the battle to restore lending in particular has led many economists to downgrade their expectations.

Alistair Darling, the Chancellor, predicted in November that the economy would shrink by no more than 1.25 per cent this year and return to a minimum 1.5 per cent growth in 2010. But the Treasury’s own survey of economists reveals the average forecast is for GDP to fall by 1.5 per cent this year, the biggest drop since 1980. The gloomiest sages predict a 2.7 per cent slump, something not seen since 1946.

What is particularly worrying is the range of sectors hit by the downturn. On Tuesday a survey of the service industries, which account for three quarters of Britain’s annual output, is expected to show that the sector is contracting fast. Casualties include the telecoms giant BT, which is expected to cut 10,000 jobs before March, mainly among agency workers and subcontractors.

Manufacturing’s plight is expected to have deepened during the final weeks of last year, with November data likely to show a further severe fall in industrial production at the nation’s factories.

The most visible victim is the car industry. Workers at Aston Martin’s plant at Gaydon, Warwickshire, will not return to work until January 19 and 600 jobs are being cut. Employees at the Crewe factory of another luxury carmaker, Bentley, will also be away from work until mid-January.

Honda is to restart production at its Swindon plant next week after a three-week stoppage but the factory is due to close again for February and March. Vauxhall, owned by GM, has invited workers at its Ellesmere Port factory to apply for a nine-month sabbatical. Jaguar Land-Rover, owned by the Indian group Tata, has introduced a four-day week and is seeking 600 voluntary redundancies.

While the car giants grab the headlines, job losses, pay cuts and short-time working await workers in smaller businesses too. About 30,000 small businesses are predicted to close this year with the loss of 150,000 jobs. Even those that survive are expected to shed 50,000 workers.

Stephen Alambritis, head of public affairs at the Federation of Small Businesses, said that small companies were doing everything they could to remain solvent and to retain staff. Among the cost-cutting measures being employed were shorter working weeks, a reduction in benefits, such as company cars and taxis, and, as a last resort, pay cuts.

“For a small employer with only five to ten staff, it is very difficult to lay off one or two people, as this has ramifications for the whole business,” he said. “So working hours is one thing that an employer can look at, and reducing the hours is one thing that a small business can handle.”

Phil McCabe, spokesman for the Forum of Private Business, said: “Calls to the FPB relating to employment matters have increased markedly and that includes inquiries about short-time working.

“In the past, an inquiry about short-time working happened once in a blue moon, now it is becoming particularly common.”

He added: “Our members are trying to control costs without making redundancies. I think that’s why we’ve seen a rise in calls relating to short-time working. However, I think we will, nonetheless, see more redundancies this year.”

For those lucky enough to have a job to return to on Monday, there is time – but only just – to buy an umbrella at Woolworths.

Explore Economics

• Pre-Budget Report 2008

• Budget 2009

• World Economic Forum

• The Times MPC

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts