By Max Clarke
Economic growth will remain stunted until 2013 while growth this year will be negligible; consumer price inflation will hit 4.5%; and disposable incomes will continue to be squeezed.
These are the alarming predictions about the future of the UK economy from the National Institute of Economic and Social Research in a report published today.
The institute also predict a 4.5% drop in house prices this year, with further falls in the coming years. While the drop will reduce the often prohibitive barriers to entering the property ladder, the reduction in home equity loan values will likely fuel a debt crisis, reducing the available income of many households, further impeding a retail led recovery.
Also predicted in the think tank’s grim report are reduced tax revenues as a result of slowed growth. This will mean that, despite the Coalition’s cuts, the budget deficit is unlikely to drop as expected. Critics of the cuts programme will see the failure to reduce the deficit as a vindication of their anti-cuts standpoint.