The UK economy will grow slower in 2012 than it did this year, according to a new report from the National Institute for Economic and Social Research (NIESR), which says that there is a 50% chance that the country will fall back into recession.
NIESR forecasts growth of 0.9% in 2011 and 0.8% in 2012, and says that the economy's continued weakness is a function of domestic demand, rather than the ongoing weakness turmoil in the eurozone. Stronger growth is predicted in 2013.
Earlier this week, the Office of National Statistics said that the UK's gross domestic product (GDP) had grown 0.5% in the third quarter of 2011 - above expectations, but still anaemic.
The risks to the economy are strongly weighted to the downside, according to NIESR, which based its forecasts on a baseline assumption that the eurozone crisis would be resolved. In the eventuality that European policymakers come up with more short-term band-aid solutions to Greece's debt issues, the probability of the UK entering another technical recession rises to 70%.
Unemployment is likely to rise to 8.9% by the end of 2012, NIESR said, but consumer price inflation should fall back from 4.4% to 2.3%.