Unemployment in the UK will "do permanent damage" to economy

A think tank has said that unemployment will rise to 9 per cent this year.

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Unemployment in the UK will rise by the end of the year, according to think tank NIESR, reaching nearly 9 per cent, up from the current 8.3 per cent.

The research organisation said that growth in the UK would be "close to zero" in 2012, doing "permanent damage to the supply side of the economy, with large long-run economic costs".

In 2013, it says, there will be a 2 per cent growth. It said in a statement:

“From the start of next year we expect more robust growth, with a sustained period of above-potential growth from 2014, which is necessary to reduce the output and unemployment gaps.”

The think tank predicts global growth will accelerate to 4 per cent in 2013, with a "mild recession" in the euro area. US growth was predicted at 2 per cent this year, and India and China were expected to continue to grow.