The U.K. gross domestic product will regain its 2008 peak in 2015, the National Institute of Economic and Social Research said Tuesday, while downgrading its economic outlook.
The think tank said the underlying economic performance is best described as flat, with zero growth in 2012. GDP is now forecast to grow 0.7 percent this year instead of previously estimated 1.1 percent.
It will be followed by 1.5 percent growth in 2014, it said. According to NIESR forecast, GDP will regain its 2008 peak in 2015, but real per capita GDP will not recover its peak until 2018.
The estimate of NIESR is weaker than the government's 1.2 percent growth forecast for 2013. The broader picture remains one of 'persistent economic weakness,' NIESR said.
However, the poor performance of overall output is in stark contrast to the labor market, where employment is 1 percent and average hours worked 0.7 percent higher than in the third quarter of 2010.
The institute projects unemployment to stabilize at about 8 percent, and to begin a sustained fall in 2015.
On price front, it said consumer price inflation will average 2.4 percent this year and 2.3 percent in 2014.
Further, the think tank said a credible fiscal framework should underpin a continued commitment to fiscal consolidation. Public sector net debt is expected to peak in 2016-17, at about 85 percent of GDP.
by RTT Staff Writer
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