George Osborne's emergency Budget has increased the chances of the British economy sinking into a second recession next year, a respected think tank says.
The National Institute for Economic and Social Research (NIESR) says the likelihood of output falling next year has risen from one in seven to a fifth.
It links the increase directly to the tough measures the Chancellor announced on 22 June.
The chances of two successive quarters of negative growth in 2011, the technical definition of a recession, is now running at slightly more than a fifth, says NIESR.
NIESR's report is likely to embarrass ministers anxious to show cuts in public spending will "crowd in" private sector investment and job creation.
The think tank adds living standards will not return to pre-crisis levels before 2015, and house prices, allowing for inflation, will decline over the course of this Parliament.
The Institute's director of macroeconomic research and forecasting, Ray Barrel, says: "The fiscal contraction in the emergency Budget is likely to slow growth by 0.1 per cent this year and 0.4% next year.
"The probability of seeing a contraction of output in 2011 as compared to 2010 has risen from 14% to 19%."
It says the chart in the Office for Budget Responsibility Budget Forecast would imply the same rise in probabilities.
However, the OBR chose not to include in its growth predictions on the possibility of a second recession, a move unlikely to quell existing doubts about the OBR's independence and integrity.
Even if a technical recession is avoided, growth will in any case be minimal says NIESR.
It's forecast has been chopped by 0.4% to 1.7%. It follows a similar reduction in the IMF's forecasts of UK growth, though the Fund remains more optimistic, at 2.1%.
In 2012, the NIESR forecast growth will be a more healthy 2.2%. Growth this year will be 1.3%.
Despite a rapid expansion in GDP of 1.1% in Q2 as recorded by the Office for National Statistics last week, NIESR says economic growth this year has so far been supported by Government current and capital spending and a slowing pace of destocking.
It says disappointing net trade figures from the first quarter of this year mean net trade is a drag on GDP growth for the year as whole.
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