British economic growth this year will fall short of Chancellor Gordon Brown's forecast as Britons borrow and spend less, an economic think tank said yesterday.
Consumers are reining in spending because of fears that the global economic situation could get worse, especially in the event of a war with Iraq.
But British growth will pick up towards the end of the year, helped by a worldwide recovery, Cambridge Econometrics said in its twice-yearly forecast of national trends. It predicted that British gross domestic product would grow by 2 1 /4 per cent in 2003, in contrast with Mr Brown who his formulating his policies on a projected growth level of between 2 1 /2-3 per cent.
The outlook for the housing market, a key factor in deciding consumer spending in Britain, remained uncertain.
'The rapid price inflation of the past two years has pushed the ratio of house prices to average earnings well above historical norms, especially in the south of England,' the organisation said.
But as interest rates and unemployment would rise only slightly, household debt would remain manageable while consumer spending slowed.
Net household borrowing between 1999 and 2001 was generally lower …