McFall says economic forecasts must be "realistic"

By Matt Falloon

LONDON (Reuters) - The government must provide "realistic" growth forecasts in Monday's pre-budget report and a fix to the controversial scrapping of the lowest income tax band, the chairman of parliament's Treasury Committee said Thursday.

John McFall, who heads an influential group of lawmakers charged with scrutinising economic policy, said Britain must play a responsible part in the offensive against the global downturn but also deliver a "sufficiently large" stimulus.

"In Budget 2008, we weren't convinced that the Treasury's growth forecasts were realistic. They were at the optimistic end of the spectrum and subsequent events haven't justified that," McFall, a member of parliament for the Labour Party told Reuters in an interview.

"We'll look for realistic forecasts that the public and markets can have confidence in."

Chancellor Alistair Darling is expected to slash his growth forecasts Monday, having predicted growth of around two percent for 2008 and 2.5 percent for 2009 in March's budget.

The government was criticised then for using optimistic forecasts to justify spending and borrowing plans but may find it harder to do so Monday, given the economy is swiftly sliding into its first recession since the early 1990s.

However, Darling is expected to deliver a sizeable fiscal stimulus to boost economic activity and has said it is right to borrow to help Britain through the downturn.

The opposition Conservatives have warned that too much of a giveaway would be unsustainable and could put further pressure on an already weak pound.