British Chancellor Mr Gordon Brown is likely to cut his economic growth forecast to factor in the impact of the attacks on America in his pre-budget report to parliament later today.
Economists say the chancellor is likely to cut his forecast for this year to 2.25 per cent and for next year to either 1.75-2.25 per cent or 2.0-2.5 per cent.
Tax revenues have already fallen this year as the British economy has slowed, but spending has also come in below target. Analysts think Mr Brown may well not change his forecast of a budget surplus of £6 billion sterling for the current 2001/2002 fiscal year to March 31st, 2002.
But he is almost certain to raise his forecast of a deficit of £1 billion for 2002/2003 and £10 billion the year after by several billion.
Mr Brown has hinted he will allow public finances to move into deficit rather than cut spending or raise taxes at this stage in the economic cycle.
Analysts say there is no need for tax rises at the moment, although Mr Brown may have to consider them in future if the government wishes to continue raising public spending ahead of the economy's growth rate.
Mr Brown is also expected to stress his commitment to increasing spending on public services but is unlikely to introduce major new spending programmes now, as the next three-year Comprehensive Spending Review is due next summer.
