THE UK should not expect economic growth this year, despite a surprise one per cent expansion in the latest quarter, according to research out today.
The National Institute for Economic and Social Research predicts a 0.1 per cent contraction during 2012, as the Olympics boost is subsumed by a broader slump.
However, this is slightly higher than its previous forecast in July.
Gathering clouds over the global economy have pushed NIESR to lower its sights for the UK in 2013. NIESR’s closely-watched forecasts now pencil in a 1.1 per cent rise next year, predicting that UK output growth will trundle higher until it passes two per cent in 2015.
This is likely yo knock back efforts to reduce the public spending deficit, NIESR adds. It thinks the budget will be broadly balanced by 2016-17, echoing hints from George Osborne that the timetable is slipping.
The chancellor will give an update on the state of the austerity programme in next month’s Autumn Statement.
NIESR thinks the global economy will expand at a below-trend 3.1 per cent this year, as the West struggles to recover and the runaway growth of the BRIC countries stabilises.