Dollar a drag on UK, warns Brown

GORDON Brown has admitted the weakness of the US dollar is having an adverse affect on the UK and world economy. Speaking to the Treasury Select Committee, the Chancellor said he would address his concerns to US officials during his coming visit to New York and Washington.

The US dollar is currently at $1.95 to the pound, making UK exports to America expensive. Brown said: 'The depreciation of the dollar is affecting the British economy and other economies around the world.'

He added: 'I will be meeting the American administration over the next few days and will be urging them that the current account and budget deficits, they have got to set a clear path for showing that these can be dealt with over the next period of time.'

Several UK companies have already warned the weak dollar is threatening their financial performance. The Ashtead Group warned today that second half numbers are likely to be hit if the dollar continues on its downward spiral.

Brown will also meet the IMF and the World Bank when he jets off to the US later today. The Chancellor said he would be discussing the hand over of the G7 and G8 presidencies to Britain, and the agenda for growth in developing economies, such as a proposal for up to 100% of debt relief from multilateral institutions.

He added Britain had a proposal to revalue IMF gold reserves to help provide funding to write off the debts of the world's poorest countries.

Brown also told the committee the UK economy was performing well, but refused to speculate on when the current economic cycle will end. 'The cycle will end when the output gap is closed. One doesn't prejudge what is happening to the economy - it's not something that we have set in stone because we are not in a position to do so.'