Brown to admit ‘economic slowdown’
Economic growth in the UK is set to be weaker than predicted, Gordon Brown will admit.
The chancellor, in Washington to address the annual meeting of the International Monetary Fund (IMF) is expected to warn that rising oil prices and a slowdown in the global economy are taking their toll on the British economy.
He is also expected to stress that the UK cannot insulate itself from the “ups and downs” of the world economy.
Mr Brown had forecast that the UK economy would expand by between 3.0 and 3.5 per cent in 2005, while analysts had suggested that the prediction was too optimistic, with IMF experts expecting the country’s gross domestic product (GDP) to grow by just 1.9 per cent this year.
The chancellor has now indicated that he will revise his forecast when he issues his pre-budget report later this year.
In a submission to the IMF’s steering group, Mr Brown said he now expected the UK’s economy to experience growth of around 2.0 to 2.5 per cent.
“No country can insulate itself from the ups and downs of the world economy. With European activity much lower and oil prices much higher, there has been an impact on growth right across the continent, including the UK,” he said.
Mr Brown will tell the IMF that the UK has also been hit by a slow down in the housing market.
But he is expected to stress that the UK’s low inflation and high employment levels will prevent the country from sinking into recession.
“Britain is continuing to grow faster this year than the other major European economies, all of whom are forecast to grow by less than 2 per cent with just 1.2 per cent growth in the euro area,” he is expected to say.
Shadow chancellor George Osborne seized on Mr Brown’s comments and accused the chancellor of “living in a dreamland” over the economy. He said Mr Brown had at last “woken up” to the state of the UK’s financial performance.
