Separately a leading think tank said Mr Osborne's economic strategy was deterring businesses and consumers from spending. The Institute for Public Policy Research said growth was set to fall to its lowest rate since the Second World War. It forecast that the UK's long-term gross domestic product growth rate will drop to just 1.7 per cent by 2015 - the lowest for over 60 years and the equivalent of £165 billion in lost output over 15 years. The left-of-centre think tank called for a change in fiscal policy, featuring temporary tax cuts, additional infrastructure spending and further quantitative easing to boost demand and bolster anaemic investment from the private sector. The report called on Mr Osborne to ditch his plans to eliminate the national deficit within five years, and be prepared instead to increase borrowing in the short term and spread deficit reduction over a longer period. Rather than creating a favourable environment for business investment, as the Chancellor claims, the IPPR said that the Government's austerity measures have made companies and individuals reluctant to spend because of uncertainty about the future. A two-year 2p cut in National Insurance would inject £14 billion into the economy and could be paid for by the introduction at a later date of a permanent mansion tax on homes worth over £2 million, said the report. The IPPR also said the Government could take advantage of historically low interest rates by borrowing £30 billion for investment in infrastructure at a cost of just £150 million a year. The IPPR report was published days ahead of Wednesday's GDP figures, which will show whether the UK lifted itself out of double-dip recession between April and the end of June. It came after the International Monetary Fund downgraded its forecast for UK growth to just 0.2 per cent in 2012 and 1.4 per cent in 2013. A Treasury spokesman said: "Reducing the deficit is an essential element for restoring stability and strength to the UK economy. Tough decisions taken by the Government on fiscal policy have created the space to support the economy through monetary activism, such as quantitative easing, and has also established credibility that has enabled firms and households to benefit from low interest rates. The Government continues to look for ways to use this hard-won credibility to support the economy, as seen in the recent announcements of the Funding for Lending Scheme and using guarantees to help investment in infrastructure, as it protects the UK economy from the ongoing uncertainty and instability in the eurozone.