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The Associated Press November 29, 2011, 7:43AM ET

UK economic forecast downgraded

The British government has revealed a gloomier outlook about the economy, but says the pain will be much worse if eurozone countries do not solve their sovereign debt crisis.

Treasury chief George Osborne said Tuesday that the Office for Budget Responsibility expects Britain's GDP to grow by 0.9 percent this year, down from its March forecast of 1.7 percent.

For next year, the OBR predicts growth of 0.7 percent, sharply down from the 2.5 percent prediction in March.

Osborne said the forecast assumes there will be a solution of the eurozone turmoil. If not, he said, "then the OBR warn that there could be a much worse outcome for Britain."

The Treasury chief said he still expects to meet his deficit-reduction target by 2015.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

LONDON (AP) -- The British government is expected to release more bad news about the economy as it updates Parliament on the latest forecasts and changes to its spending plans.

Treasury chief George Osborne will release the latest forecast from the Office for Budget Responsibility when he speaks to the House of Commons at midday Tuesday. A downgrade in growth expectations is regarded as inevitable and will come a day after the OECD warned that Britain would slip into a mild recession in the current quarter.

With the outlook worsening and public sector workers set for a one-day strike on Wednesday, Osborne has already outlined some plans to get more loan funding flowing to small and medium-sized industries and to support employment by investing in the nation's infrastructure.

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