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Niesr Predicts Nastier Future For Uk Economy

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http://www.guardian.co.uk/business/2010/jul/28/niesr-predict-future-uk-economy

The UK economy will only limp out of recession this year and growth in the following years will undershoot the expectations of the government's fiscal watchdog, according to a thinktank.

The National Institute of Economic and Social Research (NIESR) predicts Britain's GDP will grow by 1.3% this year, which is slightly more optimistic than the 1.2% forecast by the Office for Budget Responsibility. But as consumer spending fails to rebound and the government's austerity plans bite, it expects growth next year to be only 1.7% and 2.2% in 2012, compared with OBR forecasts of 2.3% and 2.8%.

The independent thinktank predicts that public sector spending cuts by the new coalition government will subtract from economic growth in every year from 2011 to 2015. The quarterly outlook for the UK is its first in-depth analysis of growth prospects since George Osborne's emergency budget in late June.

After official data last week showed the economy growing almost twice as fast as most economists had expected in the second quarter, NIESR warned the path ahead would still be "bumpy". While its outlook did not specifically mention the risk of a "double-dip recession" it did say there were risks of growth disappearing in some quarters. For the third quarter it expects growth of 0.1%, followed by 0.3% in the fourth quarter.

"We should not rule out the chances of negative quarters," said NIESR research fellow Simon Kirby. "The plans in the budget will inevitably hold growth back somewhat."

In predictions likely to be welcomed by the government in its bid to rebalance the UK economy away from over-dependence on domestic spending, NIESR is gloomy about the prospects for consumer spending. It forecasts that per capita consumer spending will not return to its pre-recession peak until 2015.

The thinktank predicts the world economy will grow by 5% this year. This compares with a dip of 0.6% last year, with a rebound in world trade playing a large role in the recovery. But it forecasts the trade effect will wane in 2011 and domestic demand in major economies will fail to pick up the slack. At the same time many countries will embark in ernest on their fiscal consolidation plans and so growth will ease off to 4.4%, NIESR predicts.

Yet more confirmation that GDP is being propped up artificially by unsustainable govt deficit spending.

Aren't NIESR estimates always way out and tend to be optimistic? This would imply it's going to be even worse than this report suggests and they've gone for weaker figures than the OBR.

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http://www.guardian.co.uk/business/2010/jul/28/niesr-predict-future-uk-economy

Yet more confirmation that GDP is being propped up artificially by unsustainable govt deficit spending.

Aren't NIESR estimates always way out and tend to be optimistic? This would imply it's going to be even worse than this report suggests and they've gone for weaker figures than the OBR.

I really wish that it were possible to publish private sector GDP, public sector GDP and total GDP. As someone said, sunlight is the best disinfectant.

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  • 142 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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