Budget cuts hurt British economy - study

Reuters / Olivia Harris

The British economy won’t begin to recover until 2014, as government’s cuts and the euro crisis slash demand which is a key driver for UK economy growth, is the conclusion of a study prepared by a leading UK think tank.

The National Institute of Economic and Social Research revised its forecast, saying the UK economy would shrink 0.5% this year, down from an initial estimate of zero growth.

“The major problem in the U.K. economy is a lack of demand, and the government can do things to boost demand,” Simon Kirby, the economist at the NIESR said.

NIESR blamed the austerity measures for the crises and called the government to borrow more money.