The Chancellor of the Exchequer, Gordon Brown, says his platform for stable growth in the UK will enable the economy to withstand the threat posed by a shaky world economy.

In an interview with BBC 2's Money Programme on Sunday, Mr Brown defended his optimistic outlook for the economy foreshadowed in last Tuesday's Budget.

While acknowledging the international threat from Japan and much of Asia in severe recession, falling output in Germany and a US share market bubble soon expected to burst, Mr Brown said the UK's combination of monetary and fiscal policy would be enough to stop it sliding into recession.

Timing right

"We are managing to see interest rates coming down and public expenditure expanding at the right time for the British economy," Mr Brown said.

Budget 99: 'growth and stability'

Mr Brown rejected question marks over official economic growth forecasts for the UK economy in the next three years, saying the government's outlook was cautious.

His plans for a 1p cut to the 23p income tax rate and �40bn extra for health and education hinge on growth predictions being fulfilled so that the government will earn enough revenue to pay for them.

But the forecasts, 1% to 1.5% economic growth in 1999 rising to between 2.75% and 3.25% in 2001, appear overly optimistic amid a raft of independent predictions showing growth falling well below 1% this year and perhaps negative for one or two quarters.

" I believe that the confidence that is coming from the Bank of England creating stability on inflation through low interest rates (along with) the soundness of our fiscal policy is something that is contributing to the economy moving upwards again.

Manufacturing set for lift

Despite revising downward growth forecasts for the manufacturing sector this year, Mr Brown predicted "a distinct improvement in manufacturing" by the end of the year. He cited Budget 'enterprise' measures to boost investment and risk-taking as factors that would help lift industry.

Mr Brown also said the government was ahead of schedule in meeting its main election commitment not to increase the tax burden and had in fact lowered it.