The paper, entitled The Credit Crunch - One Year On, has revealed that total net lending within the industry will be around £55 billion for 2008.
This is half the level experienced in 2007 and things are not expected to improve in 2009, the organisation claimed.
Average incomes within the sector will fall 40 per cent as a result, it added.
Director general Chris Cummings commented: "The impact of the credit crunch is likely to be felt much longer and deeper than was expected 12 months ago."
He went on to say that the UK government should follow the lead of the US and take action to avoid further declines in the market.
The Council of