WA65

Warning over Brown's 'golden rule'

Economists have warned that Chancellor Gordon Brown could be set to break his 'golden rule' on the economy, which stipulates that the Government can only borrow to invest over the course of the current economic cycle.

According to an ITEM Club report, the Chancellor's tax revenue forecasts have been overly optimistic, and will fall far short of estimates by the end of the financial year, despite recent economic growth.

The Treasury has denied the claims, insisting that the Government 'remains on track to meet its strict fiscal rules'.

Meanwhile, the Confederation of British Industry (CBI) has called on the Government not to increase business taxes in the forthcoming Pre-Budget Report.

Digby Jones, CBI director general, warned that rising costs could 'take the wind out of the sails' of the manufacturing recovery.

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