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Britain cuts growth forecast
 Brown said the economy had passed the "test of stability." YOUR E-MAIL ALERTSLONDON, England -- British finance minister Gordon Brown has slashed his economic growth forecast for this year, but predicted a quick recovery in 2006. Delivering his ninth annual pre-budget report to parliament, Brown said growth was at 1.75 percent, down from a forecast in the last Budget -- delivered just eight months ago -- of between 3 percent and 3.75 percent. He said the past year had been the "toughest and most challenging" the economy had faced, but said it would rebound quickly. He told MPs that growth would move back to a level between 2 percent and 2.5 percent in 2006, with a further recovery to 2.75 - 3.25 percent the following two years. Critics say Brown's reputation has taken a knock from the economy slowing far beyond what some saw as overly optimistic predictions in the last Budget, published before his party's third election win in May. The Opposition Conservatives said Brown had not told truth to the British public before the election. Jonathan Loynes, chief UK economist at Capital Economics, said before the speech that Brown had to admit the Treasury "got it wrong." Oil to blame?Brown blamed the growth slowdown on high oil prices, similar slowness in the euro zone economies and an end to Britain's housing boom, but praised the economy's resilience. He said inflation would continue to meet the government's target rate of 2 percent and that exports would rise by 5 percent this year and the year after. He also said employment had risen in the last 12 months by 330,000 jobs to 28.8 million, the highest in UK history. He told MPs: "The strength of a monetary and fiscal regime is how it performs, not just in the good years but in this, the toughest and most challenging year for the economy. "This year we have seen inflation not above 10% but around 2%; interest rates not rising above 10% but peaking below 5%; unemployment not as in the past at record highs, but at record lows; not the economy in recession, but growth even in this toughest year at 1.75%. "Britain ends this year with inflation lower than America, lower than the euro area, lower than the EU. "We are on course to meet our inflation target not just this year, but next year, and the year after that." He had earlier told Cabinet that the economy had passed the "test of stability", according to a government spokesman. George Osborne, Treasury spokesman for the Opposition Conservatives, told Parliament after Brown's speech: "I don't recall him telling the electorate before the last election that the economy faced a tough and challenging year. "What he told the electorate at that time was not true." Osborne said Brown was holding Britain's economy back, labelling him the "roadblock to reform." BorrowingBrown said Public Sector Net Borrowing (PSNB) would be £37 billion in 2005/2006 and £34 billion in 2006/07. "Even as we borrow not for short term consumption, but for long term investment, our borrowing levels are also lower than major competitors," he said. In March, Brown predicted net borrowing of £32 billion in 2005/06 and £29 billion in 2006/07. Brown also forecast a current budget deficit of £10.6 billion this year and £4 billion in 2006/07. Reuters contributed to this report. 
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