Chancellor Alistair Darling has cut his growth forecast for next year but offered hopes that the impact of the global credit crunch might be short-lived.
Mr Darling lowered GDP growth predictions for 2008 to between 2% and 2.5% – compared to the 2.5% to 3% predicted by former chancellor Gordon Brown during his last Budget in March.
But the Chancellor added that the economy remains on track for 3% growth this year and he maintained forecasts of between 2.5% and 3% for both 2009 and 2010.
His widely-expected move to cut 2008 growth predictions follows the summer’s financial turmoil when banks, fearful of exposure to losses on high-risk US mortgages, stopped lending to each other, leading to the run on mortgage lender Northern Rock.
Chancellor cuts growth forecast