UK faces stagnation in 2012, says NIESR

The UK economy is set for virtual stagnation in 2012 after four years of "unprecedented" weakness, a leading forecaster has warned.

The report from the National Institute of Economic and Social Research (NIESR) came amid signs of slowing momentum from services firms, which account for more than three-quarters of the economy.

NIESR is braced for "close to zero" growth, another jump in unemployment to 9 per cent – almost 3 million – and far higher than expected borrowing. The forecaster is pencilling in public borrowing of £120.6bn next year.