LONDON (AFX) - Chancellor of the exchequer Gordon Brown said there is "absolutely no doubt" that the U.S. downturn will have an eventual impact on economic growth in the UK.
But he said the reduction in export earnings will be more than matched by increased consumer spending.
Questioned by the House of Commons' treasury select committee, Brown also said the eur/stg exchange will "move to reflect the fundamentals of the economy" over the medium term.
He noted that sterling had come down slightly but would not be drawn into "day-to-day speculation about what the right rate should be".
Asked if the Bank of England's monetary policy committee has further scope for further rate cuts, he said it would approve of the fiscal tightening in his March 7 budget.
"It has taken a proactive stance on the economy. Equally, the fiscally tightening that has been locked in in the budget is I think something that they will approve of."
The BoE will tomorrow release the minutes of the last MPC meeting which are expected to give pointers as to future rate cuts.