Darling shrugs off IMF downgrade
Alistair Darling has defended his forecasts for economic growth despite the International Monetary Fund's decision to cut predictions for the UK to 1.6% for both this year and next.
The IMF figure contrasts with the Chancellor's own expectations of 2% growth in 2008, but Darling said the downgrade for the UK had been less severe than for other major economies.
"The IMF has downgraded every country's growth forecasts," he told Radio 4's Today Programme. "It's not surprising. We must not be complacent about what is happening at the moment."
Darling stood by predictions made in his debut Budget speech last month that Britain's economy would grow by between 1.75% and 2.25% this year and by 2.25-2.75% in 2009.
"Britain is better placed than other economies to withstand a slowdown in the global economy," he said.
"I remain optimistic that, provided we stick to the course we have set out and that we keep doing the right things, the economy will continue to grow," he added today.
The IMF is also said to have reduced forecasts for world economic expansion from the 4.1% announced in January to just 3.7%, the slowest pace since 2002.
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Last July, the fund said it though the global economy would grow by 5.2% this year despite the US credit crunch.
The US is expected to grow just 0.5% in 2008, down sharply from the 1.5% predicted at the start of the year, followed by 0.6% growth next year.
Expectations for growth in the 15-nation eurozone have been lowered to 1.3% from 1.6%, which the IMF said affords some easing of the European Central Bank's policy stance.
Yesterday, the IMF warned that financial institutions' losses due to the credit crunch could approach $1 trillion.
The tightening of credit markets that began with the collapse of US sub-prime mortgages, but spread to other lending markets and countries, has already resulted in €193bn in losses, the IMF said, adding that this figure could potentially reach $945bn.
There was also gloomy news on housing Tuesday, with UK house prices down 2.5% in March, the biggest monthly fall since September 1992, according to mortgage lender Halifax.
