Friday, 3 February 2012

UK economy set for 2012 recession says latest survey

Britain's economy is set to contract this year but will start to grow in 2013 according to a report out this morning.

The National Institute of Economic and Social Research are forcasting that the UK economy remains weak, and over the near term  do not expect economic conditions to improve.

They expect output to be flat this year, as both the private and public sectors continue simultaneous deleveraging.

They believe that consumer price inflation will fall back to 2.2 per cent this year and 1.4 per cent in 2013 but say that unemployment will continue to rise this year to about 9 per cent, and to remain elevated for the next few years.

Unemployment at this elevated level for such a long period,they say is likely to do permanent damage to the supply side of the economy, with large long-run economic costs.

Looking further afield,the Institute are forcasting global growth of 3.5 per cent in 2012. Growth,they say, will accelerate to 4 per cent in 2013, representing a downward revision of about 0.5 of a percentage point in each year compared to their last forecast.

The UK economy they say, currently suffers from deficient demand with the current stance of fiscal policy contributing to this deficiency.

They add that a temporary easing of fiscal policy in the near term would boost the economy.

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