British Chancellor of the Exchequer Gordon Brown's robust growth forecasts for next year put him at odds with the Bank of England and suggest that interest rates may still have to rise further. Brown told parliament on Thursday that thanks to sound fundamentals and a growing world economy, the outlook for Britain was as prosperous as ever. He predicted growth of 3.25 percent this year and also left his forecast for economic expansion next year unchanged at 3.0 to 3.5 percent, which contrasts strongly with a BoE forecast for growth of roughly 2.5 percent. "If the Treasury's forecast turns out to be correct than that would suggest some upside risk to interest rates," said Mark Miller, economist at HBOS. The Organisation for Economic Cooperation and Development (OECD) forecast this week base rates will rise to 5.50 percent by the end of next year from 4.75 percent now. The BoE has left the door open for another interest rate hike, but its prediction for 2005 growth is a whole percentage point below the top end of Brown's forecast range. Most British forecasters are predicting that at 4.75 percent rates are close to their peak or have already reached it. Many in financial markets have begun to place bets that rates will have to be cut next year. --More 2307 Local Time 2007 GMT
