Page last updated at 16:07 GMT, Friday, 23 January 2009

We will fight recession - Brown

Gordon Brown says global action is needed

The government will fight the recession with "every weapon at its disposal", Gordon Brown has said.

Speaking before figures showed the steepest quarterly fall in economic growth since 1980, Mr Brown said the recession was "different" to past ones.

He told the BBC its length would hinge on effective global co-operation.

The Tories said Labour's efforts to help the economy had failed while the Lib Dems said Mr Brown was "in denial" about the causes of the recession.

'Difficult times'

Figures published on Friday showed that UK economic output contracted by 1.5% in the last three months of 2008 compared with the previous three months.

This was the steepest quarterly fall since 1980.

The UK economy has now shrunk in each of the past two quarters - it fell 0.6% between July and September - providing official confirmation that the UK is in recession for the first time since the early 1990s.

The Tory party have consistently warned that Gordon Brown failed to see the boom and to prepare for the bust
George Osborne, shadow chancellor

Reacting to the figures, Chancellor Alistair Darling said the slowdown had been sharper than he had expected.

The prime minister's official spokesman earlier refused to comment on speculation Mr Darling will be forced to revise his growth forecasts once again in his March Budget statement.

In his Today interview, the prime minister said many other leading economies, including the US, were already in recession and the policies required to deal with it were totally different than in the past.

"Every recession in the last sixty years in Britain has been caused by inflation and has been domestically generated," he said. "This is a completely different kind of event. This resulted from a global banking crisis."

Mr Brown declined to say how long he thought the recession would last, saying this would depend on how the international community dealt with the crisis.

He defended the government's own response, saying it had acted quickly to safeguard the banking system from collapse, provide support for businesses and homeowners and was now doing everything it could to stimulate bank lending.

Recovery blocks

Despite these "most difficult times", the prime minister said the "building blocks" for economic recovery were in place.

The government was being "tested" by the economic problems, he added, but he believed it had the right solutions.

The BBC's economics correspondent Hugh Pym said Mr Darling would have to revise his growth forecasts for the economy in light of the new figures.

It will be deeper and longer unless policy is much better
Lib Dem Treasury spokesman Vince Cable on the recession

At the time of November's pre-Budget report, the chancellor said he expected the economy to grow again before the end of 2009 but our correspondent said this analysis now looked "outdated".

Mr Darling has said future assessments would be published in the Budget in the Spring.

During his interview, the prime minister was repeatedly pressed to admit he had got it wrong when he claimed to have ended "boom and bust" during his time as chancellor.

He conceded the government had failed to predict the scale of the financial crisis, saying: "The problem was we had a complete market failure. The markets actually seized up."

But he said the recession was different to previous downturns because it was not fuelled by inflation, which he said the government had succeeded in taming, saying: "It is quite different from anything we have dealt with before."

He described Conservative suggestions that the UK's perilous financial position meant it could ultimately be forced to go to the International Monetary Fund for emergency help, as happened during the last Labour government in 1976, as "ridiculous".

The Conservatives have been highly critical of rising government borrowing levels - which Labour say are needed to support investment and protect jobs - saying this will saddle the UK with debts that will take a generation to pay off.

'Sad commentary'

Shadow chancellor George Osborne said the UK was facing its worst economic conditions "in a generation" and Labour's failure to get to grips with the problem was denting public confidence at home and in international financial markets.

"The Tory party have consistently warned that Gordon Brown failed to see the boom and to prepare for the bust," he said.

He criticised the "endless" stream of government initiatives designed to get banks lending again, saying they lacked detail and were achieving nothing.

The Lib Dems said Friday's figures confirmed what "everyone in Britain has seen coming for a long time".

Treasury spokesman Vince Cable said they were a "sad commentary on a decade of Labour government" and the recession could not be blamed simply on problems overseas.

He added: "It [the recession] will be deeper and longer unless policy is much better."

Labour backbencher John McDonnell, chairman of the Left Economics Advisory Panel, said the government had consistently failed to recognise "the seriousness of the plight" facing the economy.

"Today's figures not only confirm a recession but point to a depression," he said.

And the TUC called for an inquiry into what led to the recession.

"This recession is not bad luck or an inevitable swing of the pendulum," said its general secretary Brendan Barber.

"Government must strain every sinew to make it as short and shallow as possible."

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