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Brown upbeat on UK growth outlook Brown upbeat on UK growth outlook
(about 1 hour later)
The UK economy is set to surprise people who thought that 2006 would be "a period of low growth", Chancellor of the Exchequer Gordon Brown has said. The UK economy is set to surprise people who thought that 2006 would be "a period of low growth", Chancellor Gordon Brown has said.
In an interview with the Financial Times newspaper, Mr Brown said that the balance of growth across the UK had been better than it was in the past. In an interview with the Financial Times newspaper, Mr Brown said that the balance of growth across the UK was better than it had been in the past.
The Treasury has predicted that growth would be between 2% and 2.5% in 2006. The Treasury had predicted that growth would be between 2% and 2.5% in 2006.
Speaking on BBC radio, Mr Brown said he would aim to keep inflation low despite strong growth. Mr Brown told BBC Radio 4's Today programme he would aim to keep inflation low despite strong growth.
Inflation targetInflation target
Mr Brown's views on the improved outlook for UK growth are shared by a number of analysts, who are also predicting that expansion will pick up next year.Mr Brown's views on the improved outlook for UK growth are shared by a number of analysts, who are also predicting that expansion will pick up next year.
According to the FT, analysts on average expect the UK economy to grow by 2.6% this year.According to the FT, analysts on average expect the UK economy to grow by 2.6% this year.
Going forward, the rate of growth should accelerate, and earlier this week the influential Ernst & Young Item Club forecasting group said it now expected the UK would grow by 2.9% next year, compared with an earlier prediction of 2.6%.Going forward, the rate of growth should accelerate, and earlier this week the influential Ernst & Young Item Club forecasting group said it now expected the UK would grow by 2.9% next year, compared with an earlier prediction of 2.6%.
We must keep inflation low and that's why the public sector pay settlements will have to be in the framework of a 2% inflation target Gordon BrownWe must keep inflation low and that's why the public sector pay settlements will have to be in the framework of a 2% inflation target Gordon Brown
Worries remain, however, and BBC economics editor Evan Davies said that the UK's quicker-than-expected rate of inflation had increased expectations of higher interest rates.Worries remain, however, and BBC economics editor Evan Davies said that the UK's quicker-than-expected rate of inflation had increased expectations of higher interest rates.
He explained that some analysts were talking of interest rates climbing to between 5.5% and 6%.He explained that some analysts were talking of interest rates climbing to between 5.5% and 6%.
Questions also have been raised over the state of public finances and how the government plans to finance its spending plans.Questions also have been raised over the state of public finances and how the government plans to finance its spending plans.
Speaking on the BBC Radio 4's Today programme, Mr Brown said that the government would look to get price growth back in line with its 2% inflation target. Speaking on Today, Mr Brown said that the government would look to get price growth back in line with its 2% inflation target.
One way to do that, he explained, was to ensure that public sector wages did not create inflationary pressures.One way to do that, he explained, was to ensure that public sector wages did not create inflationary pressures.
"We must keep inflation low and that's why the public sector pay settlements will have to be in the framework of a 2% inflation target," Mr Brown said."We must keep inflation low and that's why the public sector pay settlements will have to be in the framework of a 2% inflation target," Mr Brown said.