LONDON, Nov. 2 (Xinhua) -- A British economic research institute on Friday revised its 2012 growth forecast, predicting the country's economy would shrink by 0.1 percent.
The National Institute for Economic and Social Research (NIESR) raised its forecast for Britain's 2012 GDP growth by 0.4 percentage point from its prediction in August, to bring it back into line with two earlier forecasts in the first half of this year.
Simon Kirby, senior research officer at NIESR, said, "we expect average quarterly growth rate for Britain for second to fourth quarters this year to be 0.2 percent."
NIESR was revising down its forecast by 0.2 percentage point to 1.1-percent growth in 2013, and by 0.4 percentage point to 1.7-percent growth in 2014, Kirby said.
Trimming the forecasts is in part due to external factors, such as the continuing crisis in the eurozone and economic contraction in the EU, which is Britain's most significant trading partner.
Britain's poor growth performance over the past two years was to a great extent attributed to coordinated fiscal contraction in Britain and in the euro area, said Kirby.
Kirby said that a precursor of a return to growth for the British economy was a pick-up in domestic demand, and he predicted that business investment, which had been about 14 percent below its pre-crisis peak recently, would rebound from the end of 2013 onwards.
Per capita consumer spending also remained about 8 percent lower than the pre-crisis peak as of Q4 2007 levels. Consumer spending is expected to be driven forward, said Kirby, primarily by real consumer wage growth and a relatively stable housing market, and also by a population growth.
Kirby said inflation was likely to remain close to the 2-percent target, but he noted some upward pressures from high oil prices and just-announced increases in domestic power and fuel prices.
Interest rates are currently at an historic low of 0.5 percent and are likely to remain low throughout 2013 and 2014, said Kirby.