Chancellor Alistair Darling said in an interview published on Friday that the global credit squeeze will affect the economy, but did not say whether he will lower his growth forecast for 2008.
“If you look at the consensus of the economic forecasters, it would be prudent to assume that (the credit squeeze) will have some effect on us here,” Darling told the Financial Times.
“If you look across the world — given the importance of the U.S. economy and given what’s happened here in relation to the effect it will have on the availability of credit –it would be fairly odd if you didn’t take account of that,” he said.
The Treasury is preparing its pre-budget report and three-year spending review, but no date has been set for their publication.
GDP growth is officially forecast at 2.75 to 3 percent for 2007 and in a range of 2.5 to 3 percent for 2008.
The Bank of England left its key interest rate unchanged on Thursday at 5.75 percent for the third month running, but many people expect it to cut rates later this year as the credit crunch in global markets starts hitting the broader economy.
Credit squeeze seen hitting economy