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The UK government's plans for belt tightening are not going far enough to stem the tide of national debt, according to respected think tank the National Institute of Economic and Social Research (NIESR).

The institute warned this week that public borrowing will be higher than forecast in 2013/14 and debt as a share of national output will keep rising beyond 2015/16, the cut-off point at which the Treasury has said it expects it to fall back.

"Plans for fiscal consolidation will not be sufficient to start bringing down net public debt as a share of GDP by the middle of this decade, as the Treasury expects. Instead it will carry on rising,” warned the NIESR. "Additional retrenchment will be needed, through either extra spending cuts or further tax increases or a mixture of both."

The Institute predicted that even with further tax rises or spending cuts, net borrowing will still be 6.8% of GDP in 2013-14. The Treasury's predictions are based on an assumed figure of 5.5% The report states that "the recovery will rely on a turnaround in the inventory cycle, as companies first slow the pace of destocking and then start to rebuild inventories."

The pace of economic recovery should pick up following the 0.1% rise in GDP initially estimated for the fourth quarter of 2009, though it expects total growth of only 1.1 to 2.0% over the next two years, but unemployment will rise again, to 2.9 million (9.2%) in 2011.

Looking further afield the report argues "China will probably become the world's second largest importer this year and the world's largest economy by the end of the decade."