LONDON (Reuters) - Britain's economy grew at its slowest pace in a year in the three months through July due to virtually flat industrial output, the National Institute of Economic and Social Research said on Wednesday.
The think tank estimated gross domestic product rose 0.6 percent between May and July, from the previous three-month period. That marks a slowdown after it increased 0.8 percent in April-June, and the lowest rate for any three-month period since July last year.
NIESR bumped up its 2014 economic growth forecast for Britain to 3.0 percent in a quarterly update on Tuesday, from 2.9 percent previously.
It does not expect the Bank of England to raise interest rates until February next year - a prospect that signs of a modest slowdown may bolster.
Official data on Wednesday showed that industrial output grew by just 0.3 percent in June, half the rate economists had forecast.
NIESR said output per person might not recover to its pre-financial crisis level until 2017, citing weak productivity.
"While the economy regained its pre-recession size recently, a significant negative output gap remains," NIESR said in a statement.
Economists polled by Reuters last week also expect the Bank of England to keep interest rates at a record-low 0.5 percent until February.
The BoE's quarterly inflation report, due next week, should give further guidance on how much longer it thinks the economy can grow without generating significant price pressures.
(Reporting by Tess Little; Editing by Susan Fenton)