LONDON—Chancellor Alistair Darling said the International Monetary Fund's decision to downgrade to growth forecasts was "not surprising" but reiterated economic fundamentals were sound.
"The IMF has downgraded every country's growth forecasts," Darling told BBC radio on Wednesday. "It's not surprising.
"We must not be complacent about what is happening at the moment."
The BBC reported the IMF had downgraded its forecast for growth to 1.6 percent for this year, the weakest rate for more than a decade and significantly weaker that the government's own forecast for around 2.0 percent.
Darling said he stood by the forecasts he made in March and insisted the underlying economy was "extremely strong" with high employment and historically low levels of government debt.
Darling said he was keen to get the market for mortgage finance functioning again after a freeze in wholesale lending markets.
"We can do more to reopen the mortgage market," he said. "We need to do everything we can to help people through this difficult period."
A sharp drop in house price data for March, released on Tuesday, reinforced opinions that the housing market faces a bleak year.
Mortgage lender Halifax said house prices fell 2.5 percent in March -- the largest monthly decline since 1992, when the country was in the grip of recession.
The Bank of England is widely expected to cut interest rates on Thursday but experts say that may not help the housing market as mortgage lenders hit by the credit crunch are increasingly reluctant to lend.
Prime Minister Gordon Brown caused surprise in the financial markets on Tuesday, saying interest rates could be cut because inflation was low.
Brown, in one of his first acts as chancellor in 1997, handed the Bank control of monetary policy.
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