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UK economy growth forecast slashed

13 May 2008

The UK economy will grow by just 1.8% this year, the slowest rate since the end of the last recession in 1992, according to an influential policy group. The National Institute of Economic and Social Research (NIESR) has slashed its growth forecast from the 2% it predicted in January. It also predicts that growth will remain at 1.8% through 2009, despite having earlier said it felt 2.4% was likely. The authors of the report, Ray Barrell and Simon Kirby, said: "The UK economy has perhaps reached its most precarious position in over a decade because of global financial market developments. "The unfolding news on the current shocks to the UK economy suggests they will be more difficult to offset than others seen since 1997." While in the US the Fed has slashed interest rates to 2%, the Bank of England has been more cautious with the spectre of rising inflation looming large in its thoughts. The NIESR expects the Bank's Monetary Policy Committee to continue to loosen monetary policy gradually over the rest of the year, with a rate of 4.5% predicted by the end of the year. Copyright © PA Business 2008

 

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