Britain’s economy will grow at a slower pace this year and faces serious risks from weak productivity and a troubled eurozone, a leading thinktank has warned.
The National Institute of Economic and Social Research (NIESR) has cut its forecast for growth this year to 2.5%, down from 2.9% pencilled in three months ago and below the 2.8% rate last year. The move follows much weaker than expected official GDP figures for the first quarter, which saw Britain’s growth rate halve to 0.3%.
Those figures and the downgrade from NIESR come as a blow to the Conservatives before the election. But the thinktank said the rocky start to 2015 appeared to be a blip and the overall picture was of a “reasonably stable” recovery.
“There are undoubtedly concerns that this quarter is the harbinger of a pervasive slowdown. However, this is probably just a temporary deceleration, partly related to a fall in construction output, a sector that is particularly volatile,” said NIESR’s principal research fellow Simon Kirby.
“We expect economic growth, consistent with a modest recovery, to resume from the second quarter.”
