British Chancellor of the Exchequer Gordon Brown today announced a cut in his growth forecast for 2003. Delivering his Budget speech to parliament, he said, "I now expect growth this year will be 2 to 2.5pc, double the euro area and Japan and about the same level as in America." He maintained his 2004 growth forecast of 3.0pc to 3.5pc, predicting the same rate of expansion in 2005. In his pre-budget report last November, Brown forecast growth of 2.5-3pc for this year and three to 3.5pc for 2004.
Private sector economists are on average predicting growth of 1.9pc this year and 2.3pc for next year. Brown said the biggest risk to British economic growth was a slowing eurozone economy and forecast UK inflation of 2.5pc for next year and the years after, reaffirming that figure as the inflation target for the Bank of England. Brown also said the UK deficit will rise to STG27b this fiscal year, from an earlier estimate of STG24bn. //www.fxcentre.com