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Why do hopes for the UK economy vary so much?

Alistair Darling's suggestion this week that the UK economy would fall by around 3.5% this year, increase by 1.25% in 2010 and move on to an annual rate of 3.5% growth from 2011 onwards is so far away from the consensus it is unbelievable. There are currently no City analysts anywhere near the "rose tinted" forecast from the Treasury with a general belief that these announcements are purely politically motivated ahead of next year's general election.

City analyst after city analyst has stepped forward to question the forecasts on offer and even the International Monetary Fund (IMF) has come up with a totally separate array of figures. There is a strong belief that Gordon Brown is behind these exceptionally positive figures as the government enters the last chance saloon ahead of the election. The main element of any recovery in the UK, and for that matter the worldwide economy, is a return of confidence in the business and consumer arena. Whether the constant feed of "positive headlines" will have an impact upon confidence remains to be seen but this would appear to be a key plank of Gordon Brown's hopes for the future.

Let us all hope that Gordon Brown and Alistair Darling are right and the rest of us are wrong!

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