Growth expected to slow in 2008

By Jonathan Cable

LONDON (Reuters) - Economic growth is expected to slow this year but the likelihood of a recession remains slim if the Bank of England makes the three more cuts to rates expected this year, a Reuters poll showed.

The monthly poll of around 60 economists, taken March 7-12, showed economic growth at 1.8 percent in 2008, in line with a February poll, then picking up slightly to 1.9 percent in 2009, down from February's prediction of 2.1 percent growth.

This is also a sharp slowdown from the 3.1 percent predicted for 2007 but the chance of a recession is low, with a median forecast giving only a 25 percent chance it will occur in the next 12 months, up two points from February's poll.

"We believe the UK economy is probably heading for a slowdown rather than a meltdown," said John Hawksworth, head of macroeconomics at PricewaterhouseCoopers.

Most economists define recession as two consecutive quarters of contracting gross domestic product (GDP).

Chancellor Alistair Darling cut growth forecasts for GDP to a range of 1.75-2.25 percent from the 2.0-2.5 percent he predicted in October, while ramping up government borrowing estimates in his maiden budget on Wednesday.

In a separate poll, economists forecast a median 60 percent chance of a recession in the United States, even though the Federal Reserve has slashed 225 points from interest rates since September and another 100 points in cuts are expected.

On Tuesday central banks from around the world took co-ordinated action by pumping billions of dollars into the financial system to inject liquidity and ease concern about the deepening credit crisis and an impending U.S. recession.