The economy is already in recession, according to the Centre for Economics and Business Research.
The think tank is predicting negative gross domestic product growth for both Q4 2011 and Q1 2012, which would put the economy officially back into recession.
It has also revised its 2012 GDP forecast downwards from growth of 0.7% to a decline of 0.4% and warns there is a risk of a more serious decline of 1.1% if events in the eurozone are especially negative.
It is forecasting growth of 0.9% in 2013 and about 1% from 2014 onwards.
It adds that inflation will to fall to 1.7% by Q4 2012 and remain at about 2% thereafter.
Douglas McWilliams, chief executive of CEBR, says: “We take no pleasure in outlining such a bleak forecast but the world is going through a fundamental change where previously poor economies are industrialising fast.
“This is good news for them but, because of the limits imposed by shortages of energy, minerals and food, some of their growth is at our expense.”
He adds: “The chancellor will not reduce the deficit as quickly as he thinks since tax revenues will be depressed by slow growth.”