Britain's economic growth will be limited to just 1% in the longer term as higher government spending, dwindling North Sea oil stocks and an ageing population all take their toll on the country's potential output, a group of economists has warned.
Tempering the recent spate of upbeat news on the UK and chancellor George Osborne's assertion that the economy has "turned a corner", a new paper predicts a post-crisis era of sluggish growth.
The long-term, sustainable growth rate in the UK may be only 1%, compared with the 2.5% that the Treasury thought standard from the 1980s to the 2000s, according to a discussion paper for free-market thinktank the Institute of Economic Affairs (IEA). "Until 2008 the UK had got used to our economy doubling in size every 25 years: unless action is taken it will now only double in size every 70 years," says the group of economists, which includes former Treasury adviser and UK Independence Party candidate Tim Congdon, and Andrew Lilico, the managing director of Europe Economics, an economics consultancy.
They highlight the weakest recovery in "industrial history" and blame a lack of growth for the government's deficit reduction plan being off target.
Commenting on the analysis, t