Page last updated at 10:35 GMT, Sunday, 5 April 2009 11:35 UK

Darling 'was wrong' on recession

Alistair Darling: "2009 will be a difficult year"

Chancellor Alistair Darling has admitted the Treasury got it wrong over the length and depth of the recession.

"The downturn since last autumn has been far deeper than people expected in any part of the world," he told the BBC's Andrew Marr Show.

He declined to forecast ahead of his Budget how much the UK economy would shrink during the current year.

The Tories asked why anyone would "believe Gordon Brown's claims about his economic policies ever again".

BBC political correspondent Iain Watson said Mr Darling had a "vested interest" in sounding a note of pessimism ahead of delivering his forecasts in the Budget on 22 April.

Mr Darling said that the UK's economic decline over the past six months had been steeper than the Treasury expected.

He said the recent figures from the Far East, whose economies have been hit later, were "what's concerning most of us" because the UK was a trading nation which "suffers" if world trade falls.

Shrinking economy

This meant, he said, that measures agreed at the G20 to boost world trade would be crucial for the UK economy and help protect British jobs and "make the recession shorter than it might otherwise be".

In a separate interview with the Sunday Times he said he did not expect the economy to begin to grow again until the end of the year.

Asked if the worst was over for the British economy he said: "I think there is some way to go yet. A lot really depends on actually how much other countries do."

Budget Day looks like being the day when Labour's failures are finally laid bare
George Osborne
Shadow chancellor

While he had previously thought the UK would see growth in the second part of the year he said: "I think it will be the back end, turn of the year time, before we start seeing growth here."

The Office for National Statistics (ONS) said the economy shrank by 1.6% in the last three months of 2008. That was the biggest fall in GDP (gross domestic product) since 1980.

Unemployment rose above the two million mark last month - its highest level since 1997 - and some experts believe it will have scaled three million by the end of the year.

Mr Darling suggested measures would be taken in the Budget to increase help for people who have lost their jobs to get back into work.

He also said increased child benefits and tax cuts for some people coming into force this month, combined with measures taken in other countries to boost trade and a properly working banking system "would all make a difference".

Asked if he could afford further measures to simulate the economy, he said: "I have to balance the need to support our economy with the fact that you have got to ensure that, in the medium term, all countries live within their means. I have to reach a judgement and I will reach a judgement."

Shadow Chancellor George Osborne, said: "When the prime minister and the chancellor made his recession forecast last autumn, we along with almost every independent forecaster said it was likely to be wrong - but they wouldn't listen.

"The result is that unemployment will be higher, borrowing will be greater and the recovery more difficult. Budget Day looks like being the day when Labour's failures are finally laid bare."



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