Economists split over Alistair Darling plan to slash deficit after 2011

According to the Financial Times poll, 33 out of 71 economists broadly agree with Alistair Darling that efforts to slash the deficit should wait until 2011 because of the weak state of the economy.

But 31 took the view of the Shadow Chancellor George Osborne that recovery work should start sooner to soothe market fears, averting a potential crisis.

The split is likely to echo the debate between Labour and the Conservatives as the general election draws closer, and underlines the uncertainty as the economy edges its way out of recession.

The impact of the slump and extra spending to help the economy will send net borrowing to a record £178 billion this year, according to official forecasts.

The Chancellor has pledged to cut Britain's ballooning deficit by half within four years but has yet to set out in detail where cuts will be made.

Experts said the three biggest risks facing the economy this year were a fiscal crisis, the return of inflation and the chance of a hung Parliament.

Most were worried that the next government would fail to cut spending or raise taxes enough to sort out the public finances, which would spark a sovereign debt crisis — putting up the cost of servicing Britain's huge borrowings.

Economists are almost unanimous in their view that house prices are too high, the survey found. Average house prices rose by 5.9 per cent last year, according to Nationwide building society, bouncing back from the double-digit declines of 2008.

Of the 71 economists surveyed, 55 said house prices were too high, compared with 13 who thought they were fairly valued. One thought prices were still 10 to 15 per cent too high and looked expensive compared with incomes, although most agreed that a shortage of supply in the British market would prop up prices in the near future.