Think-Tank Predicts Flat UK Economy In 2012

04 May 2012 16:00 - Victoria Wedderburn

    



Think-Tank Predicts Flat UK Economy In 2012

The National Institute of Economic Research (NIESR) have revised up its growth forecast for 2012 to 0% from -0.1% because of an improved outlook for private sector investment and consumer spending. However, the institute did say that there were significant downside risks to their prediction such as rising oil prices and the ongoing situation in Europe. NIESR said Britain’s economy was likely to grow by 2% in 2012, down from last month’s estimate of 2.3% and that the economy would grow by 2.7% in 2014 and 2015, before settling at an annual growth rate of around 2.5% over the medium term. The report also suggests that the rate of unemployment in the UK will rise to 9% by the end of this year.

NIESR said, “Our monthly estimate of GDP suggests the level of economic activity in the economy in March 2012 was the same as in September 2010.” They added, “This clearly does not constitute a sustained recovery.” NIESR’s director Jonathan Portes has said spending cuts constituted a big drag on the economy and has urged the government to ease its austerity drive. He said, “There is clearly a substantial negative impact on GDP in the recent months from the very large cuts we’ve seen in public sector net investment. Public sector net investment was cut by something like a quarter in just the last year alone, so the case for restoring those cuts is very strong and for investment more in the short-term in infrastructure  projects and in housing in particular.”

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Related Links :
NIESR - Prospects for the UK economy
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