The National Institute of Economic and Social Research (NIESR) have slashed its outlook for the economy and predicts that it’ll contract by 0.1 percent this year. This news comes as another blow to the government, following official figures released last week which already show that the UK contracted in the final quarter of 2011.
NIESR have said that a return to recession will be driven by squeezed families cutting back further, tight credit conditions and businesses’ reluctance to invest amid uncertainty in both the domestic and foreign markets.
Simon Kirby, from NIESR has warned that it’s obvious that the economy is in poor shape and the degree to which this persists is uncertain.
The think tank is now urging the government to loosen its fiscal stance and shore up faltering demand. NIESR argue that the government could easily afford to invest enough money into the economy to avert a recession this year, without denting its credibility in financial markets or doing any long-term damage to the public finances.
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