Economic think-tank the National Institute of Economic and Social Research has forecast the next GDP figure to show output has contracted by 0.2 per cent.

This follows an earlier 0.2 per cent contraction for the three months ending in December 2011.

However, the think-tank says this does not constitute a ‘technical recession’, rather that it indicates the economy will remain ‘flat’ throughout 2012.

A ‘technical recession’ is defined as a period when output is falling or receding which NIESR says should not happen unless there is another downturn in output.

However, NIESR does not expect output to pass its early-2008 peak until 2014.

The report read: “We expect the UK economy to remain ‘flat’ over the course of this year (in our latest quaterly forecast we expect output to fall by 0.1 per cent per annum in 2012) before economic recovery takes hold in 2013.

“There are significant downside risks to the UK’s outlook this year, not least those associated with the evolution of the Eurozone crisis.”

It also confirmed the announcement by the Bank of England of further quantitative easing was the right decision by stating further QE was “necessary in order to boost demand in the short term.”

The next GDP announcement by the Office for National Statistics will be made on 24 February.