Think tank: economy will not reach pre-crisis peak until 2015

 
Ben Southwood
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THE UK economy will grow at a snail’s pace, with persistently above-target inflation, according to widely-regarded forecasts out this morning.

GDP will creep up just 0.7 per cent during 2013, the National Institute for Economic and Social Research (NIESR) said yesterday, before gaining pace to grow 1.5 per cent during the following year.

Only in 2015 will this growth bring total output in the economy above its 2008 peak – and per capita output will take until 2018, effectively leaving a lost decade, NIESR predicted.

To add to the pain, consumer price inflation will stay above the Bank of England’s target for the whole period, on average. This year it will average 2.4 per cent, NIESR says, only edging down 0.1 percentage points next year.

“The UK’s underlying economic performance is best described as flat, with zero growth in 2012,” the think tank said.

“The broader picture remains one of persistent economic weakness – GDP is roughly at the same level as two years ago, and remains more than three per cent below the 2008 peak.”

And world growth will also stay below trend, according to a separate set of NIESR forecasts. The world economy will grow 3.3 per cent this year, and 3.7 per cent in 2014, it says.