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Pastimes : The Hot Button Questions:- Money, Banks, & the Economy -- Ignore unavailable to you. Want to Upgrade?

To: maceng2 who wrote (823)	9/24/2005 10:29:12 AM
From: maceng2	Read Replies (1) \| Respond to of 1417

Economy 'weaker than predicted' news.bbc.co.uk Gordon Brown with Mervyn King, Governor of the Bank of England Economic growth in the UK will be weaker than predicted, Chancellor Gordon Brown is set to admit. He will tell the International Monetary Fund (IMF) that record oil prices and a slow global economy are to blame. The chancellor is expected to say Britain cannot be sheltered from "the ups and downs" of the world's finances. Weaker economic growth could mean less money to spend on schools, hospitals and other commitments, possibly leading to increased taxes or more borrowing. Shadow chancellor George Osborne said Mr Brown had been "living in a dreamland" over the economy and had at last "woken up". "It is vital that he takes urgent steps to curb the growing waste of public money and follows the advice that everyone from the IMF to the Conservatives have been urging," he said. This was: "Get a grip on public spending and get the public finances under control." 'Faster than others' IMF experts believe the UK's gross domestic product (GDP) will grow by 1.9% in 2005, compared to the 3-3.5% predicted by the Treasury. The BBC's Guto Harri said Mr Brown will now have to "downgrade" his forecast, to the delight of his critics. He said the chancellor's reputation will "take a knock". Mr Brown will make his speech during the annual meeting of the IMF in Washington. As well as rising oil prices - which have trebled since 2002 and doubled since last year - he will also highlight the performance of the world's economy. However, Mr Brown will state low inflation and record employment will prevent the UK sinking into recession. He will say: "Britain is continuing to grow faster this year than the other major European economies, all of whom are forecast to grow by less than 2% with just 1.2% growth in the euro area." Domestic factors The British Chambers of Commerce (BCC) said it was not surprised by Mr Brown's speech, as it had always predicted slower growth than the Treasury. Director general David Frost said: "While high oil prices and low European growth are clearly important factors accounting for lower UK growth in 2005, it is important to bear in mind the dampening domestic factors". These were "a sharp deceleration in consumer spending growth, a rapidly weakening housing market, and worrying signs of falling business confidence," he said. The BCC called for the Bank of England to cut interest rates if economic circumstances worsened, and also urged the chancellor to boost business confidence by not introducing more taxes.