29/04/2002

Chancellor's economic growth forecast 'unrealistic'

Leading economic think-tank, Ernst & Young Item Club has said that Chancellor Gordon Brown's forecast for economic growth is unrealistic.

Their forecast estimated that the UK economy will grow at 1.8% this year, compared to the 2 - 2.5% target set by the Chancellor in the Budget. Recent official figures revealed that the UK economy grew by just 0.1% in the first three months of the year.

While it is expected that The Bank of England will keep interest rates at the current level of four per cent until the end of the summer, the club believe this will be moved back up to 5.5% over the next 12 months.

The impending increase in employers' National Insurance contributions will move to further reduce pay rises and subdue inflation overall.

(MB)

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