Darling could revise growth forecasts

By Sumeet Desai

LONDON (Reuters) - Chancellor Alistair Darling looks set to lower growth forecasts and ratchet up borrowing next week but Treasury officials insist his first budget would lock in stability at a time of economic turmoil.

In the job since last June, Darling has already had to contend with a global credit crunch and Britain's first bank run in more than a century, which resulted in the government having to nationalise the country's fifth-biggest mortgage lender.

The economy is now slowing and the ruling Labour Party's popularity has slumped in the polls, increasing pressure on Darling to come up with some crowd-pleasing measures beyond the tax cuts that have already been announced.

Few government watchers expect any big giveaways this year given the state of the public finances and a relatively neutral budget is likely.

Growth forecasts for this year will have to be downgraded a little. In October, Darling predicted the economy would expand by 2.0 to 2.5 percent in 2008.

Most commentators are now forecasting something below 2 percent so Darling may be forced to revise his own estimate to 1.75 to 2.25 percent and blame a global slowdown.

"Chancellor Alistair Darling's first Budget, on March 12, is likely to have little good news and plenty of bad," said Michael Saunders, economist at Citigroup.

He is expected to say that despite the credit crisis, Britain is better-placed than most other major economies to withstand the storm and be able to boast that the economy has grown in every single quarter since Labour came to power a decade ago.