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How long will the UK economic recovery take?

The National Institute of Economic and Social Research (NIESR) is the latest in a line of groups to issue a downbeat statement regarding the future of the UK economy. The view of the NIESR, which is not replicated across the UK at this moment in time, is that UK house prices will continue to fall in value for another three years and ultimately it could be 2014 until we can say categorically that the UK economy has recovered from the recession.

The group also believes that the UK economy contracted by a further 0.4% between April and June 2009 which would indicate that the recession has lasted five quarters and recovery will not begin until later in 2009. At a time when UK consumers and UK investors appear more upbeat than at any time over the last 18 months they could ultimately be brought back down to earth by the views of the NIESR.

There are some rather dire forecasts regarding public spending which appears set to fall, no matter which party wins the next general election, and taxes are certain to increase in the short to medium term. The UK government is also set to borrow a record £165.7 billion this year to cover the budget shortfall and while the figure will start to pull back in the years to come, the NIESR believes annual borrowings of £120 billion will still be required in 2014.

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