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Budget criticised by MPs

The Budget might have made too great an assumption of future UK economic growth, a group of MPs warned today.

According to the Treasury Committee, ongoing turbulence in the global markets could lead to the credit crunch continuing through the year - provoking a sharper slowdown.

Generally, an economic slowdown or a recession in the UK leads to cuts in interest rates from the Bank of England.

This provides a stimulus to the economy, as it can make loans repayments cheaper and therefore encourages consumers to spend more.

John McFall MP, chairman of the committee, commented: "The Treasury's forecast of economic growth in the next two years is more optimistic than the consensus view."

The government's scrapping of the ten per cent income tax rate for people on low salaries, as well as its attempts at forcing wealthy 'non-dom' workers to pay more tax, were also criticised by the committee.

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