LONDON: Britain is expected to cut the country's growth forecasts this week in a key budget update, as finance minister George Osborne increasingly faces calls to rein in the government's tough austerity measures.
Chancellor of the Exchequer Osborne was to deliver his Autumn Statement before parliament on Wednesday, alongside the latest growth and borrowing forecasts from Britain's Office for Budget Responsibility (OBR) fiscal watchdog.
Experts predicted that the OBR would cut its forecasts for Britain's gross domestic product (GDP) with the country's economy buffeted by state austerity, inflationary pressures and the debt crisis in key trading partner the eurozone.
Weaker economic growth would slash future tax receipts, hitting the coalition government's purse and sparking upward revisions to its official borrowing targets, analysts say.
Osborne had in March forecast that the economy would grow by a weaker-than-expected 0.8 percent this year, followed by 2.0 percent in 2013 and 2.7 percent in 2014.
"The growth forecast will have to be revised down, not only because the euro area and hence exports will remain weak, but also because real household incomes continue to decline partly due to the persistence of higher than expected inflation," Daiwa Capital Markets economist Chris Scicluna told AFP.
"Overall, I think it will be difficult to justify a growth forecast much above 0.5 percent in 2013.
"Against the backdrop of the flat-lining economy, the chancellor would be ill-advised to try to tighten fiscal policy," he added.
Recent official data showed Britain had escaped from recession in the third quarter of this year, with its economy growing 1.0 percent thanks to the London Olympics and rebounding activity after public holidays in the second quarter.
However the outlook is clouded by the eurozone's long-running debt drama, despite it easing somewhat last week after debt-plagued Greece was granted its latest tranche of bailout cash.
"Disappointing news has become an unfortunate feature of recent Autumn Statements and again this year the chancellor will have to accept downgrades to the OBR's growth projections," said KPMG chief economist Andrew Smith.
"These will not be as savage as last year... but nevertheless point to further slippage in the fiscal position."
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