A "cautiously optimistic" Gordon Brown has trimmed the government's forecasts for growth "in an uncertain world economy".

Arguing that the UK was uniquely well-placed to weather the world's global economic slowdown, the chancellor told MPs that the revised figures still left the government within its public spending targets.

"Last year we forecast British growth in 2001 would come in at a range from 2.25 to 2.75 per cent. And we based our public finance projections on 2.25 per cent. I can tell the House that our expected growth figure is exactly that, two and a quarter per cent," he said.

The new figures compare favourably with Britain's economic competitors, with growth forecasts higher than key rivals and cuts to projections much smaller.

In November 2000 US growth for 2001 was forecast at 3.4 per cent, but is now slashed to one per cent. In Germany an expected growth of three per cent has failed to materialise, with actual growth at 0.7 per cent. And in Japan a two per cent growth rise turned into a 0.5 per cent contraction.

"So while some pre-Budget representations claimed Britain was worst placed of any to withstand the global slowdown, the OECD and IMF have both forecast that Britain this year will have the highest growth of any of the G7 countries," he said.

Projections for 2002 also place the UK well ahead of the pack, with the US on 0.7 per cent growth, the euro-zone on 1.5 per cent and Japan contracting again by 0.6 per cent.

Looking ahead, the chancellor predicted British growth of 2 to 2.5 per cent, rising in 2003 to 2.75 to 3.25 as the economy comes back on track in 2004

Remaining "cautiously optimistic about the prospects for the British economy", Brown warned that there were "real risks" ahead for the UK and global economy.

"While the British economy has been stable, it can and must be stronger," he cautioned. "The challenge for Britain - for manufacturing and across the economy - is both to maintain our hard won stability and to accelerate the productivity improvements that will increase output, jobs and wealth."