Chancellor slashes UK growth prediction

The Chancellor blamed a bad year for the UK economy as he cut the forecast of UK growth to 1.75% for the year-end.

In March, a more upbeat Gordon Brown had predicted UK economic growth of 3-3.5%, but the revised figures were a more 2-2.5% and 2.75-3.25% for 2007.

In his pre-budget speech to Parliament, Mr Brown said there had been "growth even in the toughest year at 1.75%" with low inflation, but continued growth.

Noting that there had been both global and domestic inflationary pressures, he said that inflation predictions were on target to meet 2% over the next three years.

Mr Brown contrasted the performance of the UK economy with that of the US where inflation had risen by 4.3% and in the euro zone where inflation had forced a rise in interest rates last week.

This was despite "a virtual doubling of global oil and commodity prices."

Mr Brown outlined foreign and domestic spending measures, highlighting that UK defence spending had doubled since 9/11.

However, the UK growth figures mark a sharp downturn from 2001 when the economy grew by 3.1%.

(SP/KMcA)