The International Monetary Fund has trimmed its 2003 forecast for British economic growth to 2.2% and warned of the risk of a housing price bubble.
Britain's fiscal deficit threatened to exceed targets because the government forecasts - 2.5% to 3% for this year - appeared optimistic and tax revenue might fall short, it said.
The IMF report, issued after annual consultations with the government, praised Britain's economic policies.
Timely interest rate cuts and fiscal policies, inflation targeting and a low public debt had helped Britain to weather a global slowdown relatively well, the IMF directors said.
Nonetheless, the IMF lowered its forecast for 2003 British gross domestic product growth to 2.2% from the 2.4% it was forecasting six months ago.
The IMF said demand was being stoked by high and rising levels of household debt, fuelled by house price inflation and low interest rates, making the economy more vulnerable to any shocks.
