‘Bleak’ year ahead for UK

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Britain’s economy is facing a “bleak” new year, with a real risk of return to recession during 2012, a centre-left thinktank warned today.

The only good news for consumers is an expected fall in inflation, which will ease the squeeze on spending power in households which remain in work, said the Institute for Public Policy Research.

With no solution yet for the eurozone crisis and many European economies back in recession, the risk is that a mood of austerity will stunt the UK’s growth too, said the think-tank’s chief economist Tony Dolphin.