Brown on budget defensive

Brown: "Calculations have built-in margin for uncertainty"

Chancellor Gordon Brown has defended his calculations on economic growth given in his pre-Budget report, saying that they were made on "cautious assumptions."

Mr Brown forecast that economic growth would slow next year to 1-1.5% but said it would rebound in the following year to more than 2%.

On Wednesday he called on employers to keep wages down to help his predictions of economic growth come true.

Mr Brown rejected criticism that he had been over optimistic, saying he had a built-in safety net in his calculations of growth and expenditure over the next few years.

"We have a margin for uncertainty over the next five years," Mr Brown told BBC Radio 4's Today programme.

"There is a current surplus estimate of £33bn and the rule that we've set is that we must balance the books - in other words there is a margin of £33bn," he said.

The Chancellor dismissed concerns that a further downturn in the world economy or a resurgence in sterling's strength could threaten the government's plans for higher spending on health and education.

Wage restraint

The Chancellor also called on employers and trade unions to keep wages down.

"If there is the wage responsibility that I want to see, then I believe we can keep inflation low, maintain the growth that I am predicting for next year at 1-1.5% and steer that course of stability through difficult times."

He said the government's prudence and sound economic management had enabled the Bank of England's Monetary Policy Committee to respond to the world downturn by cutting UK lending rates.

"We have taken the public finance decisions by cutting the deficit and being prudent in our public spending to enable monetary policy and fiscal policy to work together to deal with the problems of the international situation," Mr Brown said.