By Ainsley Thomson LONDON -(MarketWatch)- The U.K economy continued to contract in the three months to the end of January and is expected to be flat for the remainder of the year, 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 economy shrank 0.2% in the three month period. NIESR's estimate comes after official data showed GDP contracted by 0.2% in the final quarter of 2011. The U.K. will be in technical recession if the economy continues to contract in the first three months of this year. NIESR said its figure suggests output has been flat since October 2011, but should not be interpreted as confirmation that the U.K. is in recession. The think tank said it expects the economy to be flat for the remainder of 2012 before a recovery takes hold in 2013. "There are significant downside risks to the U.K.'s outlook this year, not least those associated with the evolution of the euro area crisis," NIESR said. Weighing on the economy is a combination of weak consumer and business confidence, tight credit conditions, rising unemployment, high living costs, muted wage growth and the deepening euro-zone debt crisis. Earlier Thursday, the Bank of England said it will buy another GBP50 billion of U.K. government bonds with freshly-created money in an effort to shore up the fragile economy. The central bank said its rate-setting Monetary Policy Committee voted to expand its program of quantitative easing to take the total scale of its stimulus efforts to GBP325 billion when the latest batch of purchases is complete.

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