There is a 70 per cent chance Britain could fall back into a recession in 2011-12, according to the National Institute of Economic and Social Research.

The independent research organisation said the threat of a recession was dependent on how well the Euro area crisis was handled by policymakers.

The report said: “We estimate the chances of a technical recession at close to 50 per cent, even with the successful resolution of the crisis. If policymakers ‘muddle through’ the Euro Area crisis the probability of recession in the UK rises to 70 per cent.”

Economic growth was forecast as 0.9 per cent this year before falling slightly to 0.8 per cent in 2012. It predicts that the UK will not see any ‘robust growth’ until 2013.

The Institute did not forecast a strong recovery for the UK and said the economy would not reach its pre-recession peak again until 2013.

“The economy will not return to its pre-recession peak until the end of 2013; this would be the slowest recovery since the end of the First World War.”

Inflation, which currently stands at 5.2 per cent, is expected to fall to 2.3 per cent then drop below the official two per cent target by the end of next year, similar to the Bank of England forecast last month.