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Chancellor sticks to growth forecast
Jonathan Prynn, Consumer Affairs Editor03.07.08
Alistair Darling risked derision from the City today by refusing to downgrade his official forecasts for economic growth over the next two years.
While increasing numbers of City economists are predicting stagnation or full-scale recession, the Chancellor said he stood by his Budget forecasts from March.
Mr Darling claimed in the Budget that the economy would grow by between 1.75 and 2.25 per cent this year, and 2.25-2.75 per cent next year. His forecasts were seen as dangerously-optimistic at the time - all the economic data has since deteriorated.
One leading City figure said: "The Chancellor has clearly decided on a career in stand-up comedy."
In a joint press conference with US Treasury secretary Henry Paulson, Mr Darling today said the economy remained "fundamentally strong" and was much better placed to deal with turbulence than in the Nineties. "We set out our forecasts in the Budget-and pre-Budget Report, and that remains the position," he said.
Mr Darling said he did not expect the economy to go into recession:"I believe that our economy will continue to grow."
City forecasters were astonished by the claims. Howard Archer, chief UK and European economist at Global Insight said: "These forecasts are completely unrealistic, to be honest. We are forecasting 1.4 per cent growth this year but 0.9 per cent in 2009. A modest recession is looking a very real possibility."
