The British economy will shrink 4.3% in 2009, the worst contraction since 1931, the National Institute for Economic and Social Research or NIESR said Wednesday. However, the economy is expected to grow 0.9% in 2010 given the export recovery and 2.3% in 2011.
The think tank's forecast is bleaker than the government's outlook to contract 3.5% this year, and then grow by 1.25% in 2010. It is also gloomier than a 4.1% fall in gross domestic product predicted by the International Monetary Fund. For 2010, the IMF sees a further decline of 0.4%.
The NIESR said in a report that the pace of decline to date shows a remarkable resemblance to that of the depression of the early 1930s. It added that the similarity should be broken as a feeble recovery gets under way in the final quarter of this year.
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