Darling slashes growth forecast » Housing » 24dash.com

Chancellor Alistair Darling has slashed his forecast for economic growth while warning that global financial turbulence poses a "major risk" to the world economy.

Delivering his first Budget statement, Mr Darling said that growth this year would be between 1.75% and 2.25% - compared with the 2% to 2.5% he was predicting at the time of the Pre-Budget Report last October.

But Mr Darling promised to take action to get the UK through uncertain economic times. In his first Budget, Mr Darling unveiled a package of measures he claimed would maintain growth and keep inflation and interest rates low.

Despite the Northern Rock crisis, which has blown a £25 billion hole in public finances, the Chancellor said the UK was better-placed than other countries to deal with the global economic crisis. Mr Darling also told MPs his Budget would help tackle climate change and help hard-working families.

He said: "The core purpose of this Budget is stability - now and in the future. And its core values are fairness and opportunity, founded on stability and strength. In every country in 2008, every government has one aim - to maintain stability through the world economic slowdown."

Among the measures he unveiled was a widely-expected postponing of the increase in fuel duty which was due in April, but will now take place in October.

Mr Darling said that while borrowing this year had come in lower than expected at £36 billion, it was set to rise to £43 billion next year - an increase of £4.6 billion on his Pre-Budget Report forecast. However, he insisted he would still meet the "golden rule" of only borrowing to invest and delivering balanced budgets over the course of the economic cycle.

Mr Darling promised extra help for "hard-working families", including an increase in child benefit for the first child to £20 a week from April 2009 - a year earlier than planned.

He also promised to increase by £50 a year above inflation the child element of the Child Tax Credit for families on low and middle incomes from April next year. "This means that a family with two children, earning up to £28,000 a year, will be over £130 a year better off," Mr Darling said.

The Chancellor said more action was needed to help vulnerable groups deal with rising energy prices. And he warned that new legislation would be introduced unless energy companies acted, saying: "Energy companies currently spend around £50 million a year on social tariffs. I want to see this rising to at least £150 million a year over the period ahead."