UK's economic growth is forecast to slow to 2.3%

THE EUROPEAN Commission has cast doubt on the durability of the UK recovery by cutting its forecast for economic growth in 1995 from 2.7 to 2.3 per cent because of the tax increases imposed in the Budget. It maintained its 1994 growth forecast at 2.5 per cent.

'The UK's recovery is more consumer-led than other countries in the European Union, and that is starting to stabilise or stagnate,' said Henning Christophersen, the economic affairs commissioner. Growth in the European Union is forecast to climb to 1.6 per cent this year and 2.5 per cent next, against November predictions of 1.3 per cent in 1994 and 2.1 per cent in 1995.

Mr Christophersen said three key factors had prompted a more upbeat economic outlook: a favourable international economic environment after the successful Gatt talks; another drop in short-term EU interest rates and restored business and consumer confidence as a result of fading uncertainties about European integration and calm in the exchange rate mechanism.