Darling plays down IMF economic growth downgrade

Alistair Darling has been criticised for his optimism about the economy

Wednesday, 09, Apr 2008 12:00

Chancellor Alistair Darling has played down reports the IMF has downgraded its forecast for Britain's economy.

The IMF believes growth will slow to 1.6 per cent this year, significantly weaker than the government's forecast of around two per cent.

Speaking on the Today programme, Mr Darling said: "It is not surprising, given what is going on in the global economy, that right across the world the IMF has decided to lower growth expectations.

"I made my forecast in the Budget and I stand by that forecast."

Mr Darling said the fundamentals of the economy were strong as levels of government debt are historically low, while employment is high.

However, Mr Darling accepted that there was strain on personal budgets and on house buyers.

"We need to do everything we can to help people through what is undoubtedly a difficult period.

"That means making sure that we support the housing market but also making sure of course that we support the wider economy, keeping people in work," he said.

Earlier this month the Confederation of British Industry (CBI) also downgraded its 2008 outlook for UK growth, down 0.2 per cent to 1.8 per cent, as well as the Institute of Directors following suit.

Fears over the state of the economy were not helped by a sharp drop in house price growth on Tuesday. The biggest slump for 12 years - down 2.5 per cent - has shaken financial markets and confirmed a property slowdown.

The size of the drop, as well as declining mortgage availability, could prompt the Bank of England to take action on Thursday and lower interest rates, despite worries over rising inflation.