While Australia's recession is unlikely to be as deep as those in comparable countries, the unemployment rate is set to hit 8.5 per cent late next year as the economy reels from the steep collapse in commodity prices.

The forecasts will be cold comfort for the Government, whose budget in a fortnight could include the largest deficit in the country's history.

Access, in its latest business outlook, expects the drop in company tax takes to create a $50 billion deficit in 2009-10. If so, that will take the deficit to more than 4 per cent of gross domestic product - and potentially outstrip the 4.1 per cent deficit of the early 1990s.

"The downswing in fiscal finances looks set to be deeper and sharper than experienced in the recessions of the early 1980s and early 1990s," Access says.

The mining boom helped increase profits in Australia to a larger share of national income than in many other countries, and the collapse in minerals prices - expected to strip $40 billion a year from national income - means profits could halve in the coming years.

The forecasters also expect the latest US plan to remove bad assets from its banks will not "do the trick", meaning "Australia and the world are stuck in a waiting game until politicians screw up the courage to push for [temporary] nationalisations".

The NSW economy will continue to deteriorate, but steep slumps in Queensland and Western Australia mean they are likely to pursue it to the bottom.

Responding to the Access report, the Treasurer, Wayne Swan, said: "While this report confirms the brutal impact of the global recession on jobs, growth and revenues in Australia, it also applauds the quality of the Government's stimulus measures and notes Australia is better placed than basically any other advanced economy."