The Church of England is launching an unprecedented campaign of practical and spiritual help today for anyone in the grip of post-Christmas financial difficulties.

The “matter of life and debt” campaign draws on Bible texts and specially written prayers in an effort to give hope to those at the mercy of loan sharks, high-interest credit card repayments and other financial burdens.

The Church has disclosed to The Times that it is to offer guidance to all its clergy on giving debt advice from the pulpit and within community groups. It is also providing a ten-point debt checklist to help people to work out if they need assistance before it is too late.

The Church’s intervention comes as pressure intensifies on the Bank of England to make an immediate cut in interest rates in the face of an abrupt souring of confidence among business leaders and financiers. The Church’s concerns about the state of the British economy echo the Bank's worries about dangerous levels of unsecured borrowing.

Gordon Brown used a round of new year interviews to give warning that 2008 would be difficult and dangerous for the world economy, but hinted that Britain was in a better position to cut interest rates than other countries. Calls were growing for a quarter-point cut in the base rate to 5.25 per cent to reduce the risk of the sagging economy of recent weeks deteriorating into a more serious slowdown or even a full-blown recession. The Bank, which announces its decision at noon on Thursday, faces a dilemma, however, because a cut could worsen inflationary pressures already evident in soaring energy and food prices.

The decision, which follows a quarter-point cut last month to 5.5 per cent, is on a knife-edge, according to City analysts, although most believe that the Bank will delay until next month.

The British Chambers of Commerce said yesterday that it understood that the Bank’s natural inclination would be to pause before cutting for the second time, but this would be a mistake. “A decision to wait would not be surprising, but would be wrong in our view,” David Kern, the group’s economic adviser, said. “Given the immediate threats, the risks of waiting are greater today than the risks of acting early.”

Surveys published today reveal a triple dose of evidence that confidence is evaporating alongside weakening house prices, the rationing of credit by banks and soaring energy bills.

— Business volumes in the financial services industry, the most important private-sector driver of the British economy, have fallen at their fastest rate since 1991, according to the latest survey from the CBI. Profits at banks and securities dealers have collapsed, it said, and building societies were at their gloomiest for 18 years

— Business leaders are at their gloomiest for five years, according to a poll by Lloyds TSB, which identified a sharp deterioration in boardoom confidence in the past few weeks. The British economy will get worse in the months ahead, according to per cent of bosses, a level of despondency not seen since December 2002. Only a month ago, the proportion was 28 per cent

— Business confidence fell for the fourth straight month in December, according to the accountants BDO Stoy Hayward, which calculates a monthly index designed to track optimism in the boardrooms of Britain. Poor high street sales, slowing house prices and rocketing oil prices, which hit $100 a barrel for the first time last month, were to blame, it said.

Share dealers have wiped £4 billion off the value of retailers’ shares in the past week, amid fears that Christmas trading will turn out to have been poor. Marks & Spencer is expected to reveal this week that its underlying sales have fallen in recent weeks, while J Sainsbury is thought to have missed internal profit and sales targets. DSG International, which owns Currys, and Land of Leather, both issued profit warnings last week.

Inflation hawks argue, however, that cutting rates now would risk igniting inflation further, especially as sterling has weakened in recent weeks, which raises the prices of imported raw materials and goods.

Lloyds TSB’s chief economist for corporate markets, Trevor Williams, said: “While there has been a steady trend towards economic pessimism during the past four months, firms became far more cynical in December. This would suggest that the UK is set for a period of below-trend growth but the Bank of England’s decision to start cutting interest rates could still reverse the spiral.”