The U.K. economy narrowly avoided falling back into recession in the first quarter of 2012, an independent economic research group said Thursday.

The National Institute of Economic and Social Research said its estimate of the U.K.'s gross domestic product indicates that the U.K. economy grew 0.1% in the three months to the end of March.

NIESR's prediction for the first quarter comes after official data showed the U.K. economy contracted by 0.3% in the final quarter of 2011. That means the country would be in technical recession--defined as two consecutive quarters of contraction--if the economy continued to shrink in the first three months of this year.

"Today's growth estimate from NIESR supports the independent Office for Budget Responsibility's assessment that the UK will avoid a technical recession," a Treasury spokesman said. "Despite the difficult international conditions, there are encouraging signs at the start of the year: inflation is falling, and business surveys show all sectors of the economy growing."

The OBR's forecast is for the economy to expand by 0.3% in the first quarter.

NIESR said although the economy will avoid recession, the recovery will not fully take hold until 2013.

The research group said the weak rates of growth would result in the U.K.'s output gap widening--meaning there will be additional slack in the economy, such as unemployed workers and idling production lines.

By Ainsley Thomson, Dow Jones Newswires, 44 20 7842 9318;

ainsley.thomson@dowjones.com