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Thursday, 28 November, 2002, 16:36 GMT
Brown's Budget 'gamble' under fire
Gordon Brown and his treasury team
Mr Brown is facing criticism over borrowing plans
Chancellor Gordon Brown has been accused of gambling with the UK economy by his "optimistic" forecasts for future prosperity.

In his pre-Budget report on Wednesday, Mr Brown had to downgrade his previous forecasts and plug the gap by borrowing more than 100bn the next five years.

The decisions have won support among Labour MPs but the opposition parties and some economists say Mr Brown may have got his forecasts wrong again.

The chancellor went on the offensive on Thursday, saying he was ready to stake his reputation on his borrowing decision.

He is trying to stamp on claims that he had ditched his famous "prudence" and caution.

The pre-Budget report said a world economic slowdown meant the UK economy would only expand 1.6% this year, compared with a forecast in April for growth of between 2% and 2.5%.

This, he explained, meant borrowing in the year would be 9bn greater than earlier forecast.

And borrowing over the next five years would increase by 30bn on his April forecast to 102bn.

Tory shadow chancellor Michael Howard called the pre-Budget report a moment of humiliation for a "downgraded" chancellor.

Michael Howard, chancellor
Michael Howard lampooned the "downgraded chancellor"
Mr Howard said: "The chancellor was forced to admit that his forecasts on growth were wrong, his forecasts on revenue were wrong, his forecasts on borrowing were wrong.

On Thursday, Mr Howard warned: "It looks as though he is doing the same thing again."

That was a worry echoed by the chancellor's Tory predecessor, Ken Clarke.

"No-one can predict the economy with certainty," Mr Clarke told BBC Radio 4's World At One programme.

"That's why Gordon is really rather taking a gamble by relying on the optimistic forecasts he's now sticking to."

'Goodbye prudence'

Ciaran Barr, from Deutsche Bank, suggested the forecasts were a "best case scenario", especially as the economy was currently in an unusual cycle.

Monday's newspapers also echoed the fears of opposition politicians and some in the City.

"Goodbye Prudence!" the Daily Mail declared, while the Daily Telegraph talked of the chancellor "plunging Britain into the red".

Striking firefighters
Brown: Striking firefighters pay claim is unjustifiable
But Mr Brown hit back at his critics.

"I take full responsibility for the figures and the decisions that I make," he told BBC Breakfast.

"But I think people will see themselves that the British economy, far from being in recession like other countries, is a British economy that is growing and that is as a result of the difficult decisions we have made over the last five years."

Mr Brown pointed to the historically low levels of current debt.

"It has allowed us to borrow and I said yesterday, if we can keep our inflation low, which we will, and if we can meet our fiscal rules, as we will, then its the right thing to borrow as we are doing.

"Of course we will take all the right decisions for the British economy in the future."

However, Liberal Democrat spokesman Matthew Taylor argued Mr Brown's figures signal there was a real problem with long term growth and with British industry.

"That is something unique to this economy," said Mr Taylor.

"Our investment in industry has fallen off the cliff."

The early appointment of Mervyn King as Bank of England governor - the report's biggest surprise - is being seen as an attempt to offer an element of stability in an uncertain climate.

Mr Brown's "prudence" was praised by TUC general secretary John Monks.

"It is a tribute to the chancellor's stewardship of the economy that even at a time when the world economy faces real difficulties, he is able to stay on track with sustained increases for public services and real boosts for those on low incomes," he said.

"The prudent thing to do at this stage of the economic cycle is to increase borrowing.

"Suggestions that interest rates need to rise in order to meet inflation targets are absurd."

Mr Brown also used his statement to warn striking firefighters that "inflationary and unjustified" pay settlements could not be met.

The BBC's Rebecca Pike
The Chancellor is having to borrow nearly double what he expected to fund his ambitious spending plans"
Chancellor Gordon Brown
"Pay must be matched by productivity"
Former Chancellor Ken Clarke
"No-one can predict the economy with certainty"

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