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UPDATE 3-UK's Darling to present budget April 22 after G20

Published 02/12/2009, 11:41 AM

(Adds Brown quote, DMO details)

By Matt Falloon and Sumeet Desai

LONDON, Feb 12 (Reuters) - British finance minister Alistair Darling will present his annual budget on April 22, three weeks after the G20 financial crisis summit in London, as pressure grows for more action to help prop up the recession-hit economy.

Britain's economy shrank at its fastest rate since 1980 at the end of last year and the International Monetary Fund thinks it will contract by 2.8 percent this year -- making Britain the hardest hit among the G7 major industrialised nations.

Given the dire economic outlook, expectations are rising that Darling will have to ramp up public borrowing again to finance another fiscal stimulus package on top of his 20 billion pound ($28.65 billion) plan announced in November.

"I think there will be something but I don't think there is scope for a big stimulus," said Ross Walker, economist at RBS.

"People will probably be thinking along similar lines of what we had last time. Anything less than one percent of GDP and you'd struggle to make the case that it was going to have a major boost."

Darling will also have to take another look at his economic forecasts, last updated in November, to account for the sharply bleaker picture.

Back then he said that GDP in 2009 would fall by about 1 percent and then bounce back, but the economy has since nosedived. The Bank of England said on Wednesday the economy could continue to contract sharply for much of this year.

G20 SUMMIT

The timing of the budget, after the end of the financial year and the latest since 1997 when the Labour party came to power, has been influenced by the date of the G20 meeting of leading developed and developing nations in London on April 2.

"I can tell the House that following the meeting of the G20 countries in April this year's Budget statement will be on the 22nd of April -- that is when the House returns after its Easter recess," Darling told parliament on Thursday.

Parliament goes into recess from April 2 until April 20.

"It's no big deal, we've had budgets in April before," a Treasury official said.

Treasury officials are focusing their efforts on working towards a successful G20 summit, with pressure growing on policymakers to go well beyond platitudes and to step up their efforts to tackle the global economic downturn.

"The context for any financial decisions that are made by most countries is going to be what internationally we can achieve," Prime Minister Gordon Brown said.

Brown and Darling may also want to wait for a nod from the global community before unleashing another fiscal stimulus.

"It's probably easier to do that if there's a general statement saying we'll do what it takes, including X, Y, Z and fiscal policy," RBS's Walker said.

Brown's Labour government, lagging in the polls and needing to fight an election in less than 18 months, has repeatedly cited the virtues of higher government spending to pull Britain out of recession.

"Fiscal stimulus is hugely important," Treasury minister Yvette Cooper told parliament.

The November pre-budget report forecast public sector net borrowing of 118 billion pounds, or some 8 percent of GDP, in 2009/10 and the government is already issuing a record amount of gilts this year.

But Darling will be keen to stress an intention to bring the budget deficit back under control once the economy recovers.

The Debt Management Office said it would only publish gilt issuance plans for April and May on March 31 and fill in the rest of the fiscal year's issuance calendar after the budget.

(Additional reporting by Fiona Shaikh, editing by Ron Askew)

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