NIESR forecast lower growth than the OBR
Yesterday’s GDP estimates from the National Institute of Economic and Social Research (NIESR) may be causing the Treasury some concern, given NIESR’s conclusion that growth during the last quarter of 2010 was only 0.5 per cent, lower than ONS’s current estimate for Q3 2010 and therefore suggesting a further decline in the rate of recovery. Slowing growth towards the end of 2010 has also led NIESR to conclude that over the year the economy only expanded by 1.6 per cent, 0.2 percentage points below the OBR forecast.
The NIESR estimate further shows that the cuts may be starting to have an economic impact – while the growth indices for industry and private services rose (by 0.3 and 1 percentage points on the quarter respectively), there was a fall of -0.3 points in the contribution that public services made to output.
Lower growth, rising unemployment and questionable levels of private sector job creation suggest we are still some way from a sustainable recovery. It appears that ‘insubstantial‘ growth strategies may not be enough.