THE International Monetary Fund has become the latest economic heavyweight to pour cold water on chancellor Gordon Brown's projections for UK economic growth by cutting its forecasts for the current year and 2004.
According to a draft of the Washington-based body's World Economic Outlook, the IMF has trimmed its estimate for growth in the UK this year from 2% to just 1.8%. That is well adrift of the 2% to 2.5% range to which Brown has been sticking, despite a raft of downbeat data this year.
The gap between the IMF's estimates for 2004 and those on which Brown has based his predictions for government borrowing is wider. While the fund has pared its growth target from 2.5% to 2.3%, the chancellor has pencilled in 3% to 3.5%.
Economists said the forecast, in a report in which the IMF cut its estimates of global and eurozone growth but left projections for the US unchanged, brought the fund into line with the consensus view in the UK.
Brown, who has trimmed his growth estimates twice in the last year, had room to undershoot his targets without a radical change of policy being required before the end of the current economic cycle in 2005.
However, if growth did not pick up by 2006 big increases in taxes could be required to bring borrowing under control.
Adam Chester, at Bank of Scotland, said: ''The revision for this year is no surprise given the weakness in the second quarter. Robust growth is needed in the second half just to get to 1.8%.''
Following growth in gross domestic product of only 0.3% in the second quarter, the Bank of England recently said it expected an annual increase of less than 2% this year, rising to almost 3% in mid-2004.
Jonathan Loynes at Capital Economics said an estimate of around 2.25% growth next year appeared reasonable, meaning ''quite a significantly higher growth in public borrowing''.
Big surpluses from the late 1990s meant Brown could probably avoid breaching his golden rule, of borrowing only to finance investment over the economic cycle, until 2006 - after the next general election.
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