Wednesday June 17, 05:15 PM
UK's Darling-budget projections for growth on track
LONDON, June 17 (Reuters) - Recent signs the British economy is on the mend is in line with the April budget forecast of growth resuming toward the end of the year, finance minister Alistair Darling will say on Wednesday.
In his annual Mansion House address to the City of London (LSE: CIN.L - news) , Darling will say it was important to remain cautious about the green shoots of recovery seen in the last few weeks.
'There is still a great deal of uncertainty in the global economy,' he will say, according to extracts released by the Treasury.
'There is growing evidence that the steps taken, at home and internationally, are stabilising the banking system and supporting our economies. And this is in line with my Budget forecast for growth around the turn of the year.'
Darling forecast in his April budget that the economy would shrink by some 3.5 percent this year and then grow by 1.25 percent next year.
Since then, however, a number of indicators have suggested that the pace of decline -- the economy shrank by 1.9 percent in the first quarter -- is slowing and some analysts are even saying the recession may have ended in the second quarter.
'I remain confident, but cautious,' he will tell the assembled financiers.
The Bank of England is also taking a similarly cautious view. Minutes of its June 3 and 4 policy meeting published earlier on Wednesday also noted signs of improvement in the economy but said that had not changed the medium-term outlook the central bank published last month.
Policymakers remain concerned that credit conditions remain constrained and that will prevent a meaningful recovery.
Darling will also set out his planned reforms for financial regulation, saying the authorities need to take a more macro-prudential apprpoach and bank boards need to be more alert to risks and not chase easy profits.
'Anyone who thinks that we can carry on as if nothing has happened should think again. In every country we are paying a huge price for this crisis. Not just the financial cost but also a profound social and human cost,' he will say.
Darling will publish a detailed paper on financial regulation shortly and will set out several areas of reform in his speech including more transparency, stronger national and international regulation, better means of dealing with failures, and a greater focus on system-wide risks. Keywords: BRITAIN DARLING
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