Print This Page Email This Page See Most Sent

• U.S. Marines Elated to Reach Central Baghdad • Persecuted Iraqis Consider Their Future • Why Can't the IRS Collect Unpaid Taxes?

Despite economic uncertainty and the war in Iraq, Britain's treasury chief on Wednesday forecast a robust recovery for Britain and shunned major tax hikes in a budget he introduced Wednesday.

Gordon Brown, Chancellor of the Exchequer, announced a budget that boosts taxes on beer, wine and cigarettes but leaves many other taxes untouched. He promised to pursue full employment even as he trimmed the country's projected growth rate for 2003.

"Britain even in difficult world conditions is able to meet our military and security costs abroad and at home and the costs of building peace, while maintaining in full our record investment in schools, hospitals, transport and policing," he said.

Brown reduced his growth forecast for this year to between 2 percent and 2.5 percent, down half a percentage point from his forecast in November. He laid the blame mainly on an economic slump in other big economies, such as France and Germany, in the European Union.

But a resurgent U.S. economy would help Britain's growth pick up by 3 percent to 3.5 percent in both 2004 and 2005, he said.

Brown contended that Britain would have the fastest-growing economy this year among the Group of Seven the United States, Canada, Germany, France, Italy and Japan.

However, some analysts derided his assumptions as overly optimistic and reliant on a hoped-for resurgence in U.S. growth once the Iraqi conflict ends. They noted that Brown has had to revise British growth estimates downward twice in six months and said he may have to do so again.

"It's partly a bit of wishful thinking on his part," said Angus McCrone, senior economist at the Center for Economics and Business Research, an economic forecasting firm. "We don't think there's going to be a strong rebound at all."

Charles Kennedy, leader of the opposition Liberal Democrats, said Gordon had presented a "cross-your-fingers-and-hope-for-the-best budget." A feeble world economy and a slowdown in consumer spending would limit Britain's growth to 1.4 percent both this year and in 2004, forcing Brown to scale back his growth estimate yet again, he said.

David Page, an economist at the London investment bank Investec, agreed that Brown's growth estimates for the next two years were "a little bit excessive."

"He's factoring in a much faster recovery in investment spending. We don't think the economy is likely to see that sort of pace," Page said.

photo credit and caption:

Britain's Prime Minister Tony Blair listens, right, as Chancellor of the Exchequer Gordon Brown delivers his budget speech in the House of Commons in London, Wednesday April 9, 2003, in this image from television.(AP Photo/pa)

Copyright 2003 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.