The UK risks faltering growth for the rest of this year amid savage belt-tightening to tackle deficits at home and abroad, an economic forecaster warned today.
The latest monthly estimates from the National Institute of Economic and Social Research (NIESR) showed national output up 0.7 per cent in the three months to June, slowing from the 0.9 per cent seen in the quarter to May.
But NIESR warned the UK economy faced "headwinds" after Chancellor George Osborne's brutal emergency Budget, which will claw back £113 billion a year in spending cuts and tax hikes by 2014/15 to bring down the deficit.
Governments across Europe are also taking severe action to address creaking public finances, with unions in crisis-stricken Greece staging their sixth general strike of the year today in response to the latest round of austerity measures.
The forecaster said: "Fiscal consolidation both in the UK and the euro area will restrict growth in the short-term and there is clearly a risk that this rate of growth will not be maintained through the rest of this year."
The latest official growth figures showed UK output expanding by 0.3 per cent in the first quarter of the year, slower than the 0.4 per cent growth in the final three months of 2009 which marked the nation's exit from its longest and deepest recession on record.
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