Owen Smith MP, Labour's shadow Treasury minister, said in response to the National Institute of Economic and Social Research's UK economy overview:
"These are really worrying forecasts for our economy, for families feeling the squeeze, young people out of work and businesses on the edge.
"The respected National Institute is right to say that the poor performance of the British economy in the last year has been driven by weak domestic demand rather than the eurozone crisis of recent months.
"Trying to cut spending and raise taxes too far and too fast isn't working because the slow growth and higher unemployment the government has delivered will make it harder to get the deficit down.
"That's why we urgently need a plan for jobs and growth, like the five point plan Labour has set out. As NIESR say, the case for a more balanced deficit plan which would be better for jobs and growth - and the deficit too - has been strengthened in recent months. It's time for this out of touch government to act."