Britain and the US will grow faster than any of their partners in the G7 group of rich nations this year, Chancellor of the Exchequer Gordon Brown said yesterday.

"Britain and north America will be the two fastest-growing economies this year of the G7 industrial countries," he told BBC Television.

He compared the performance of Britain and the US favourably with counterparts in continental Europe. "We've got a recession in Italy, we've got low growth in Germany, we've got a downturn in France," Mr Brown said. "Britain is continuing to grow."

In his March budget, the chancellor forecast that the British economy would grow 3-3.5 per cent this year - a rate many analysts think will be tough to reach.

However, Mr Brown backed his numbers. "If you look at what has happened in the last week alone, inflation has come in lower than target, employment is seen to be rising again, retail sales were higher than people expected," he said.

"I do believe we are seeing the benefits of stability in the British economy."

Official data last week showed that British retail sales unexpectedly rose in April but the annual rate slipped to its weakest in two years and economists cautioned that the overall trend remained weak.

Policymakers have highlighted the risk of slowing household spending dragging down the wider British economy and warned the downturn could be more than a temporary soft patch.

Separate figures showed Britain's inflation rate held steady near a seven-year high of 1.9 per cent in April, still a fraction below the Bank of England's 2 per cent target.

Mr Brown denied his hefty public spending programmes would create a "black hole" in Britain's finances, which would have to be filled by tax increases in the years ahead. "We have got a lower deficit than almost all our major competitors," he said. "All our spending plans are set out years ahead." - (Reuters)