After another day of turmoil on the financial markets yesterday, the British Chambers of Commerce (BCC) warned of a "collapse" in confidence across all sectors of industry while an authoritative study of Yorkshire businesses revealed a 37 per cent drop in the number of companies reporting increased domestic sales compared to last year.

A fifth of firms in the region are expecting to cut their workforce during the next quarter.

The bleak findings come after another day of gloom and panic yesterday, when the FTSE 100 suffered its biggest fall since Black Monday in 1987, seeing £93bn wiped from the value of the UK's biggest companies.

Governments across Europe moved to prop up banks while the Icelandic government worked on an economic rescue plan and stock markets tumbled; 600 workers were made redundant as a Sheffield car parts supplier went into administration.

The Government's new economic "war Cabinet" met for the first time, after which Chancellor Alistair Darling reiterated his pledge to do "whatever is necessary" to ensure financial stability ahead of a meeting of European Union foreign ministers today.

Amid confusion and concern about Germany's apparent pledge to guarantee 100 per cent of people's savings – a political pledge rather than legally binding agreement which was made without warning, to the irritation of Mr Darling – leaders of the EU nations issued a joint statement pledging "close co-ordination and co-operation".

The amount of savings guaranteed in British banks rises from £35,000 to £50,000 today – covering 98 per cent of accounts and 60 per cent of all savings – and the Financial Services Authority will now consult on increasing it further, as Mr Darling urged other countries against taking "unilateral" action.

The Government will announce its Banking Bill today which will give the Bank of England powers to rescue struggling banks.

Yesterday the Chancellor warned shareholders in Bradford & Bingley that he could offer no guarantees about how much their investment would be worth.

More than 300 B&B investors have written to the UK Shareholders Association complaining they have received no word about the value of their shares. Mr Darling commented: "At the end of the day, this bank does have an awful lot of assets which at this moment are not worth very much at all."

The BCC survey – for the third quarter of the year – and a call for interest rates to be cut comes ahead of the Bank of England's monetary policy committee meeting on Thursday where a decision on rates will be made.

A survey of 764 businesses by Yorkshire and Humber Chambers of Commerce found exporters doing better than those selling to domestic markets. Business confidence is at a low, with 41 per cent of companies expecting profitability to worsen next year, and only 34 per cent thinking it will improve.

Nick Pontone, Yorkshire and Humber Chambers' executive director, described the collapse in confidence as "worrying".