The index dropped by over 30 percent in 2008, end of year figures show.
The FTSE 100 suffered an all-time record fall in 2008, as the global credit crunch turned into a banking crisis - and led to a severe economic downturn.
Closing early at 12.30pm on New Year's Eve, the London Stock Exchange's flagship index stood at 4,434 points - gaining 0.94 percent during the day. However, the FTSE stood at 31 percent lower than it did on New Year's Eve 2007, when it closed at 6,457 points.
This is the worst annual fall since the exchange's inception in 1984, meaning that the annual effects of the crunch have been worse than that of Black Monday in 1987, the recession of the early 1990s - during which the UK crashed out of the Exchange Rate Mechanism - and the bursting of the dotcom bubble of the early 2000s.
Still worse falls have been experienced on other stock exchanges - with indices retreating by roughly 50 percent globally since the onset of the financial crisis.
The worst weeks of the year came in September and October, following the collapse of US investment bank Lehman Brothers and the rapid-fire nationalisations of insurer AIG and mortgage lenders Fannie Mae and Freddie Mac. A seeming run on the global banking system as a whole saw the FTSE drop by over 20 percent in a five-day period in early October.
However, the announcement of bank rescue schemes from various world governments alleviated the downturn in the equities markets over the following weeks.
Speaking to the BBC after the year of turmoil, Dirk Mueller of MWB Fairtrading was reluctant to make any 2009 forecasts. "I believe that we will have a lot of problems next year and much deeper prices than this year," he commented. "But where we will be at the end of the year, absolutely no clue."
