UK optimistic over economic growth

The IMF report claimed that the UK economy would face a slowdown caused by a fall in house prices, turmoil in the financial sector and a fall in exports to the US and Europe.

If the correct action were taken, it would be possible to keep the economy growing at the same rate it has experienced over recent years.

While the IMF predicts a UK growth rate of 1.6 per cent over 2008 and 2009, the chancellor stood by his estimation of 1.75 to 2.25 per cent over 2008 and 2.25 to 2.75 per cent in 2009.

Speaking on BBC Radio Four's Today programme, Mr Darling maintained his belief that "there were grounds for optimism" due to the UK's "strong economy that had proved remarkably resilient".

He also said that if the correct action were taken, it would be possible to keep the economy growing at the same rate it has experienced over recent years.

The starkest predictions in the IMF report concerned the property market, with claims that falls of up to 10 per cent could be expected in house prices.

Mr Darling pledged that the government would "do everything we can" to help homeowners and said it was his intention to support the housing market.

He also noted that the report, which claimed the credit crunch would cost the global economy over £472 billion, suggested the UK would be affected less than other countries it examined.