This shows two things, Firstly how abysmal are the Treasury forecasts - or how deliberately over-optimistic they were, since nobody believed them at the time! And secondly how Darling is slowly distancing himself from Gordon Brown who is in total denial (He is still infuriating other countries by pushing for his unworkable idea of a global transaction tax)
But as you can see he seems to have no plans to reduce the mountain of debt in 4 years - merely not to be adding to it so fast. If he thinks buyers of government stock will go on lending with that forecast he hasn’t begun to grasp the problem!
Christina
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TELEGRAPH 27.11.09
Chancellor poised to cut growth forecasts to lowest post-war level
Alistair Darling will use the pre-Budget report (PBR) next month [in 12 days time on Dec:9th] , to slash his economic output forecast this year to the lowest level in post-war history.
By Edmund Conway, Economics Editor
The Chancellor will cut the official economic forecast for 2009 to around -4.75pc, from the Budget's forecast of a 3.5pc contraction, according to Treasury sources. The sources said that output had fallen faster than expected at the start of the year, but added that they still expected the economy to start growing again before the end of 2009.
The downgrade will be an embarrassment to the Chancellor, who is also likely to have to increase his borrowing projection marginally, since tax revenues have disappointed expectations this year. However, Mr Darling will instead stress that he expects the economy to return to full growth again next year.
Sources said the Treasury was likely to forecast growth of between 1pc and 1.5pc next year – unchanged from the forecast included in the Budget, and in line with independent projections.
Last night a Treasury official told Reuters: "The assumption is that the economy grew between 0.2pc and 0.4pc in Q4."
The forecasts are almost directly in line with those issued by the Organisation for Economic Co-operation and Development in its Economic Outlook report last week.
The PBR is expected to contain further details of how the Government plans to halve annual government borrowing from its present level of £175bn within four years. [Firstly the figure of £175bn is out of date and most expect it to be around £200bn. Secondly this leaves net borrowing in 4 years time at around £90bn - having paid not one penny back of our debts -cs] . The Chancellor repeated this pledge yesterday, but added that it would be imprudent to start cutting spending before the economy had started to recover.
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