Business | Banking
Darling hints at 'profound' effects of global credit crisis
Chancellor of the Exchequer Alistair Darling said fallout from a global credit crunch is proving worse than previously expected, a sign that UK policy makers are bracing for slower growth.
- Bloomberg
- Published: 00:03 July 23, 2008
London: Chancellor of the Exchequer Alistair Darling said fallout from a global credit crunch is proving worse than previously expected, a sign that UK policy makers are bracing for slower growth.
"The effect of what has happened is going to be far more profound than people predicted even at the turn of this year," Darling said in an interview with Bloomberg Television, which will air excerpts on Wednesday.
"It is quite clear that if you look during the course of this year, conditions have become more difficult across the world."
The finance minister, whose tenure has coincided with the sharpest decline in house prices and the steepest rise in living costs in a decade, reiterated his belief the British economy will escape recession and pledged to keep up the fight against inflation.
The deteriorating economic outlook, together with a run on deposits at Northern Rock in September and a series of U-turns on tax policy, have eroded Prime Minister Gordon Brown's popularity.
Britain's economic growth will probably slow to 1.6 per cent this year and 1.3 per cent in 2009, the weakest since 1992, according to a survey of 40 economists by the Treasury released on July 16. In March, Darling expected growth of up to 2.25 per cent this year, compared with 3.1 per cent in 2007.
The central bank expects growth to slow to 1 per cent in the first quarter of 2009. Consumer prices climbed 3.8 per cent in June from a year earlier, the most since records began in 1997.
House prices fell the most in 15 years in June as higher borrowing costs reduced mortgage lending, triggering the worst property slump since Britain's last recession in 1991, according to HBOS.
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