Mr. Darling predicts growth in UK Economy

In a highly political UK budget Chancellor of the Exchequer Alistair Darling has cut his growth forecast for next year to between 3% and 3.5%. He had earlier predicted growth would reach 3.75%. He stuck to his prediction the economy will expand by 1.5% this year.

The Chancellor also revealed that Britain's budget deficit will be smaller than the £178bn expected in the pre-Budget report. The UK will borrow £167bn this financial year and £163bn next year. The central issue in the Budget has been the deficit, which standing at 12% of GDP is one of the largest in Europe. It has made the handling of the nation's finances by Prime Minister Gordon Brown and Chancellor Darling a key election issue
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Uncertainty about the possible outcome of the General Election, due to be held on May 6th has weakened the Pound the international currency market. Polls have indicated that the Conservatives lead is narrowing, raising the risk of a hung parliament. This would make any proposed spending cuts more difficult to implement. Yesterday's budget postponed measures to curb the deficit until after the election is held.

Investors reckon that only after the election the next Government - whether Labor, Conservative or a coalition – will spell out in detail the scale of the cuts in public spending and rises in tax required to return the public finances to health. Credit rating agencies have indicated they will wait until this time to judge whether Britain deserves to keep its much-prized 'AAA' rating, a measure of a borrower's creditworthiness.

Out later today are UK retail sales figures. Last month figures were disappointing with a fall of 1.8% in sales volume. A rise of 0.6% is predicted this time.

In the forex online market yesterday the Pound dropped 0.81% against the US Dollar to close at GBP 1.4896. It also dropped against the Euro by 0.22% to close at GBP 0.8945.

Across the Atlantic, US orders for durable goods rose in February for a third month, while inventories and backlogs climbed by the most in more than a year, indicating the manufacturing rebound will keep propelling the U.S. recovery.

The 0.5% increase in bookings for durable goods was in line with expectations and followed a 3.9% gain the prior month, the Commerce Department said today in Washington. Excluding transportation equipment orders rose 0.9%, more than anticipated.

Business spending on new equipment, inventory restocking and a pickup in global demand mean companies like Boeing can look forward to sustained sales gains. A pickup in employment is still needed to broaden the expansion as the economy heals from the worst recession since the 1930s.

“Manufacturing has and will continue to drive this recovery,” David Semmens, an economist at Standard Chartered Bank in New York, said before the report. “Export demand will continue to grow, domestic orders continue to rise and the inventory liquidation cycle has stopped dragging on growth.”

Elsewhere in the US, new home sales fell unexpectedly in February to a record low as blizzards, unemployment and foreclosures depressed the market. Purchases decreased 2.2 % to an annual pace of 308,000, according to figures from the Commerce Department. The average sales price climbed by the most in more than two years.
The new-home market is vying with foreclosure-induced declines in prices for existing homes in an economy where unemployment is forecast to average 9.6% this year, close to a 26-year high. Treasury Secretary Timothy F. Geithner said on Tuesday that it would take a “long time” to repair the housing market as the administration takes steps to overhaul real-estate financing and regulation.