Pressure on Brown to cut growth target

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The Independent Online

Gordon Brown will come under pressure to cut his optimistic forecast for economic growth when the International Monetary Fund slashes its own predictions later this month.

The global financial watchdog will cut its outlook for growth in the UK this year from 2.6 to 2.1 per cent. This will put it below the Chancellor's forecast of 2.25-2.75 per cent.

Mr Brown was criticised for being overly optimistic when he published the figures in his March Budget, when there were signs a global economic slowdown was already under way. Economists in the City expect the Chancellor to trim his forecasts when he publishes the pre-Budget report in November.

The IMF will also cut its 2002 growth forecast – to 2.6 from 2.8 per cent – according to a leak to the Reuters news agency. The Fund's report is due to be published on 26 September.

A Treasury spokesman said: "The Chancellor has said in the past that no country can insulate itself from the global economic slowdown. But because of the changes that have been made to the monetary and fiscal framework we are in a better position to withstand a global shock than in the past."

The IMF's forecast is in line with the average of City economists' predictions, which are for 2.1 per cent growth this year and 2.4 per cent in 2002.

There was further evidence yesterday the recession in UK manufacturing was having a wider effect. Optimism about the general economic situation among British households evaporated in August, according to a poll carried out by GfK. Confidence fell from a positive reading in July to zero. However, consumers remained confident about their own finances.

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