Economists from a leading think-tank yesterday increased the pressure on Chancellor Gordon Brown's economic growth forecasts.

According to the National Institute of Economic and Social Research (NIESR), the UK economy will grow by 2.2 per cent in 2003, accelerating to 2.8 per cent in 2004 and 2.9 per cent in 2005.

The institute predicts there will be a further cut in UK interest rates.

In his April 9 Budget speech, Mr Brown said growth would be between 2 per cent and 2.5 per cent this year and 3 per cent to 3.5 per cent for the following year.

The report increases the pressure on Mr Brown's figures after first quarter GDP data proved weaker than expected at 0.2 per cent on Friday.

Yesterday, the CBI warned manufacturing orders fell at their fastest rate for four years in the first three months of 2003.

The NIESR said the recent fall in currency exchange rates should support growth in the short to medium term.

It added: "Interest rates are likely to be cut this spring but will subsequently rise towards the end of the year."

The Bank of England's Monetary Policy Committee has come under increasing pressure to make further cuts to interest rates to ease the pressure on British industry.

The nine-strong committee made a surprise decision in February to cut rates to 3.75 per cent.

Further gloom on consumer spending emerged from the NIESR report, which predicted household spending growth will slow to 2.4 per cent this year and 1.7 per cent in 2004.

The think-tank also kept its forecast for UK GDP growth in 2003 at 2.2 per cent. But it raised the forecast for 2004 from 2.4 per cent to 2.8 per cent, reflecting the effect of the sharp fall in the pound.

Further bad news for Mr Brown came as the NIESR said the UK Budget deficit was set to rise well ahead of the Treasury's projections.