The Institute for Public Policy Research (IPPR) said consumer and business morale had been dampened by concerns there will be further years of austerity, and by the continuing uncertainty over the eurozone crisis.

Tony Dolphin,  chief economist at IPPR, said: “It seems that time has stood still for the last 12 months.

“Policymakers appear to have little idea how to boost growth in the economy and are left hoping that the news will get better. The risk is that 2013 could be groundhog year for the UK economy.”

The Office for Budget Responsibility expects the UK economy to grow by 1.2% in 2013.

But the IPPR said such growth could only be achieved if consumers started spending more, which would likley mean them taking on more debt.

Dolphin said the government was counting on “something just turning up” to lift the economy.