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NIESR cuts 2015 economic growth forecast to 2.5 percent

Published 06/05/2015, 03:31
© Reuters. City workers are reflected in a window as they pass near the Tower of London

LONDON, May 6 (Reuters) - A leading think tank cut its forecast for Britain's economic growth in 2015 on Wednesday, a day before a closely fought national election, but said strong consumer spending should keep the recovery on track.

The National Institute of Economic and Social Research (NIESR) also said none of Britain's main political parties had satisfactorily addressed the country's biggest economic problem of stagnant productivity.

NIESR cut its British economic growth forecast to 2.5 percent this year, from a previous forecast of 2.9 percent made in February. Last year, Britain's economy grew by 2.8 percent.

The downgrade reflected a weaker-than-anticipated 0.3 percent expansion in the first three months of this year rather than a rethinking of the British economy's prospects, NIESR said.

"What we're talking about is a modest blip and a return to a reasonable rate of growth," said NIESR economist Simon Kirby at a press conference.

The pace of economic expansion will hold roughly around 2.5 percent in the years ahead, said NIESR, assuming that poor productivity growth picks up as it expects.

Officials at the think tank said they were disappointed that productivity was mentioned only a handful of times in the pre-election policy manifestos of Britain's main political parties.

© Reuters. City workers are reflected in a window as they pass near the Tower of London

"Does anything in the manifestos match up to the scale of the challenge (of improving productivity)? It would be difficult to be very positive about that," Jonathan Portes, NIESR director, said.

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