The UK will return to recession in the first half of this year as the Government's fiscal squeeze continues to take hold and households cut back on spending, a leading think-tank has warned.
The National Institute of Economic and Social Research ( NIESR ) has predicted a GDP drop of 0.1% in 2012 due to household retrenchment, tight credit conditions and uncertainty in the eurozone.
The think-tank expects the economy to return to growth of 2.3% in 2013 but only if the eurozone debt crisis is resolved.
But it says unemployment will rise to 9.1% before that and may not ever return to its pre-crisis level without action by the Government to boost near-term spending.

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