But other forecasters have warned that the economic slowdown could mean that the government will miss its self-imposed borrowing targets.

Peter Agar: Public finances in pretty good shape

Speaking at the organisation's annual conference in Birmingham, President Sir Clive Thompson said a panic review could be "very economically damaging".

The chancellor addresses the first full day of the conference on Monday morning, a day before his pre-Budget spending statement.

The CBI's Chief Economic Adviser, Kate Barker, said that "provided the current economic slowdown does not turn into a recession, the consequent rise in public borrowing should not require a review of spending plans."

She said the country's finances were in a fundamentally sound condition which was not put at risk by the public spending announced for the next three years.

CBI Director General Adair Turner said the UK was well placed in the short term to to allow public borrowing "to rise by a reasonable amount to create automatic stabilisers" to counter the slowdown.

Gordon Brown: Bank of England now able to react more quickly to crises

Mr Brown has announced plans to spend an extra £40bn on health and education and there are worries that a slowdown in the economy will mean that tax revenues will not provide adequate funds to do this.

He said he would not borrow to fund such spending, over the whole economic cycle.

Gordon Brown: Britain can have low inflation but only with wage responsibility

Under the so-called Golden Rule, the government would only borrow money to finance long-term investment.

Spending calculations were made before the global financial crisis forced a cut in economic growth forecasts.

In this week's pre-Budget spending statement, Mr Brown is expected to cut his forecast for UK economic growth from 2-2.5% to around 1%.

Other forecasts more gloomy

Independent forecasters have warned that the government could miss its self-imposed limit of only borrowing to invest.

The National Institute for Economic and Social Research, in its latest forecast, says that public borrowing will be £8bn in 1999-2000 and a total of £23bn for the period 1997-2001.

"This means that the Golden Rule of matching investment with borrowing with be broken," the report said.

The Institute says is there is a one in three chance of recession and predicts that unemployment will rise by 140,000 next year.

But it says that if interest rates come down to 5.75% and the government maintains its spending plans then the UK economy will still grow by around 1.1% in 1999.

Slowdown ahead

The CBI does not believe that the British economy is heading for recession, just a slowdown.

It says the economy is also in much better shape to withstand a downturn than it was in the early 1990s:

This is because:

• People have less mortgage debt,

• Interest rates are much lower,

• There has been no house price hyper-inflation.

But the organisation repeated its call for interest rates to be cut decisively by the Bank of England this week to combat the anticipated slowdown.

Long-term pressures

Despite the CBI's praise for the UK's sound public finances, it warned that long-term problems remained.

It said public spending was set to rise due to the pressure for improved health and education.

The government would have to consider "radical options" such as reducing welfare spending as a percentage of gross domestic product or introducing charges for some areas of health and education.