Top think-tank predicts Britain will see zero growth this year
THE ECONOMY will stagnate in 2012, recording no growth, a leading think-tank predicted yesterday, contrasting starkly with official forecasts for an economic expansion and raising calls for a short-term fiscal boost.
The fall in GDP in the first quarter of the year, which took Britain back into recession, has dragged down the National Institute for Economic and Social Research’s (NIESR) outlook to forecast no growth for the year, compared with the Office for Budget Responsibility’s (OBR) 0.8 per cent prediction.
But NIESR expects a strong acceleration to two per cent growth in 2013, matching the OBR’s outlook.
The think-tank argues for a short-term fiscal stimulus as “the UK suffers from a lack of demand”, which it believes would help the economy but not damage long-term deficit reduction targets.
The weak state of the economy is in part influenced by the ongoing Eurozone crisis – NIESR expects a shallow recession followed by a delayed but successful resolution to the crisis.
Meanwhile it forecasts global GDP growth of 3.7 per cent in 2012 rising to four per cent in 2013.