UK Treasury chief downgrades economic growth forecast, ups borrowing prediction

UK lowers forecast for 2009 GDP

LONDON — British Treasury chief Alistair Darling has downgraded his forecast for the economy this year, saying it will shrink by 4.75 percent.

That is significantly worse that the 3.5 percent contraction Darling predicted in April.

But he has kept his forecast of 1-1.5 percent growth for next year.

Darling has also raised his 2009-2010 borrowing forecast slightly to 178 billion pounds, from 175 billion pounds previously.

Britain is the only major economy still in recession, with the United States, Germany and Japan all already recording growth.

The Labour government’s pre-budget report is seen as key to setting the tone for a debate about how best to fuel Britain’s slow recovery ahead of next year’s general election.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

f0068 dstream 85 12-09 12:52 x bf bc-eu–apnewsalert,0016 london (ap) —

LONDON (AP) — British Treasury chief Alistair Darling has downgraded his forecast for the economy this year, saying it will shrink by 4.75 percent.

That is significantly worse that the 3.5 percent contraction Darling predicted in April.

But he has kept his forecast of 1-1.5 percent growth for next year.

Darling has also raised his 2009-2010 borrowing forecast slightly to 178 billion pounds, from 175 billion pounds previously.

Britain is the only major economy still in recession, with the United States, Germany and Japan all already recording growth.

The Labour government’s pre-budget report is seen as key to setting the tone for a debate about how best to fuel Britain’s slow recovery ahead of next year’s general election.