UK bracing for economy slowdown
The City was today gearing up for UK Chancellor Gordon Brown to admit the economy was not growing as fast as originally forecast.
Economists believe the Chancellor’s GDP forecasts for 2002 and 2003 will be cut by as much as 0.5% when he unveils the pre-Budget report later today.
Borrowing projections are also expected to be raised as a result of the missed growth targets.
Some believe borrowing levels will soar 55% to £17bn (€26.6bn) in the current year as the British government makes up the shortfall in income and corporate tax.
Tax hikes are unlikely, however, because of a significant surplus built up by the British government in recent years.
But Philip Shaw of Investec bank said: “This year’s pre-Budget report is unlikely to herald any of the concessions that we have seen in recent years.”
The City has long believed growth forecasts set in April’s Budget, of between 2% and 2.5% for 2002 and 3% and 3.5% for 2003, were over ambitious.
