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Thursday, 21 November, 2002, 09:18 GMT
Brown warns of economic slowdown
Chancellor Gordon Brown
Brown said Britain cannot avoid the global slowdown
Britain will be hit by the sluggish global economy, Chancellor Gordon Brown has warned in an interview, in what is being seen as a sign that he will cut the Treasury's economic growth forecasts.


What we want is each continent to be able to pull its weight if we're going to sustain the momentum of recovery

Gordon Brown
Mr Brown gave his assessment of the economy in an interview with the Financial Times newspaper ahead of next week's pre-Budget report.

"This great trading nation, which has built its success over a long time through its ability to export and trade, cannot be unaffected by a 13% fall in the growth rate for world trade between 2000 and 2001 and by the slow recovery of world trade since then," he said.

The FT said his remarks indicate the pre-Budget report will contain bad news, including a downward revision of economic growth and higher government borrowing.

Open in new window  :  At-a-glance
How healthy is the UK economy?
Mr Brown is expected to cut Treasury growth forecasts for the UK from their current levels of 2-2.5% for 2002 and 3-3.5% for 2003.

The newspaper said he also hinted that there would be incentives for business investment to rebalance an economy driven by a consumer spending boom linked to high house prices.

European problem

He said that all economies in the world needed to take responsibility for reinvigorating economic growth and not just rely on the US.

"If you look at what's happened over the past few years to the global economy, America has been the engine of growth and what we want is each continent to be able to pull its weight if we're going to sustain the momentum of recovery," he said.

The paper said he appeared to take a swipe at his European counterparts, advising that raising taxes would damage economic growth.

His remarks were also interpreted by the FT as favouring an interest rate cut in Europe.

"I hesitate to advise an independent central bank what it should do directly, but to diagnose part of the problem as not simply economic reform ... but also demand, is important," he said.


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21 Nov 02 | Business
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