NIESR: UK recession over but depression will continue

Economic growth in the UK will be subdued and output will fail to reach 2008 levels until 2013, according to the National Institute for Economic and Social Research (NIESR).

The UK think-tank said while the recession is over, the depression is likely to continue and further economic stimulus was necessary to boost output levels.

Output levels fell to 0.3% in the three months to the end of November, from 0.4% in the quarter ending in October. NIESR said it was unlikely UK output levels will reach 2008 levels until 2013.

NIESR interprets the term 'recession' to mean a period when output is falling or receding, while 'depression' is when output is depressed below its previous peak.

The body said the findings also supported the case for further loosening of UK monetary policy.

The Bank of England announced plans to inject a further £75bn into the economy through asset purchases in October, but is yet to fully implement the measures.

Last month, figures from the Office for National Statistics (ONS) showed the manufacturing sector shrank by 0.7% in October; its fastest monthly fall for six months. Compared with the same month in 2010, output was 1.7% lower, which is the largest drop since April.