The National Institute of Economic and Social Research (NIESR) has just launched its quarterly review of the UK economy. It actually believes that Britain will see a 1.3% increase in GDP this year, which is above the forecast of 1.2% made by the Office for Budget Responsibility.
However, that is where the good news ends. NIESR forecasts that GDP will only grow by 1.7% in 2011-12 and 2.2% in 2012-13. This is substantially lower than forecasts made by the OBR of 2.3% and 2.8% respectively. NIESR believes that the governments severe spending cuts will lower economic growth in every year up to 2015, particularly due to cuts in consumer spending.
Although the last quarter showed surprising growth of 1.1% the NIESR said that the future could still be “bumpy”, and that there may be no growth at all in some quarters. It actually expects growth of only 0.1% in the third quarter of this year and 0.3% in the fourth.
As far as the world economy is concerned the thinktank predicts growth of 5% compared with a downturn of 0.6% last year. However, it expects the fiscal austerity plans in many nations will reduce growth the following year to 4.4%. The global recovery is expected to be led by sharp growth in Asia, especially in China, India and Taiwan.
Tags: austerity package, Consumer Expenditure, economic growth, GDP
