Alistair Darling could be forgiven if he had quietly crossed his fingers as he signed off on this month’s relatively upbeat Treasury forecasts for Britain’s economic outlook for this year and next. Economic forecasting is a dangerous game in the calmest of times but in times of financial turmoil economists can be left wondering if tea leaves might have proved more accurate.

After the bailout of Bear Stearns, the stricken US investment bank, Mr Darling’s confidence that Britain will weather these storms is facing renewed challenge.

Yesterday the CBI challenged the Treasury’s prediction that the economy will rebound from a lacklustre 2008, with growth of as little as 1.75 per cent, to expand next year by at least 2.25 per cent, and as much as 2.75 per cent – about its long-run average growth rate.

The employers’ organisation believes that Britain faces a protracted downturn as a persistent credit squeeze saps growth well into 2009. The CBI expects UK growth this year of 1.8 per cent falling to a still more anaemic 1.7 per cent next year.

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The Chancellor’s more bullish case will come under still more intense scrutiny next month, when the International Monetary Fund (IMF) reveals its latest assessment of prospects worldwide.

However, several respected analysts believe that, amid the huge uncertainties over how the credit crunch and American downturn will unfold, the Chancellor and the Treasury may well still be vindicated.

Mr Darling will have taken particular heart from last week’s forecasts from the Organisation for Economic Cooperation and Development (OECD). It projected that UK growth in the current and next quarter will forge ahead at 0.6 per cent, making it the strongest performer in the Group of Seven leading economies.

If that were fulfilled, it would be hard, given such strong momentum through the first half of the year, for Britain to slide into the sort of dire straits expected by the gloomier economists. Martin Weale, director of the National Institute of Economic and Social Research, argues that while it is “perfectly possible to imagine a pretty gloomy scenario”, there are many reasons to be more cheerful.

Mr Weale’s present forecast, for the economy to grow by 2 per cent this year, and 2.4 per cent next year, is based on the economy drawing some strength from the boost to exports and manufacturing delivered by a sharply weaker pound.

Although the weaker housing market is taking some toll on consumers, he argues, too, that “actually, consumption is not as sensitive to house prices as people imagine”.

Trevor Williams, chief economist at Lloyds TSB, also doubts that the economy will be undermined by the modest falls in house prices he anticipates. Mr Williams predicts that the credit squeeze will abate and that Britain will benefit from a rebalancing towards stronger manufacturing bolstered by the global economy, outside the US, remaining resilient. Lloyds expects UK growth of 2.1 per cent this year, and 2.7 per cent in 2009.

Yet there is no shortage of bleak views from economists at the other end of the spectrum.

Gerard Lyons, chief economist at Standard Chartered, still expects growth to plunge to just 1.2 per cent this year, with a muted recovery to deliver a 1.9 per cent expansion in 2009.

“The Chancellor is trying to talk a good story,” Dr Lyons says. “But it is a fragile situation.” He believes that the credit squeeze will intensify and the international environment deteriorate, with a US recession already underway. Dr Lyons thinks the Chancellor will ultimately have to admit to tougher times: “I think he’s going to be coming back saying, ‘the picture is much weaker than we thought’.”

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