Page last updated at 16:58 GMT, Sunday, 19 April 2009 17:58 UK

Parties clash over Budget outlook

Alistair Darling delivers Budget message on YouTube

Senior Labour and Conservative figures have clashed ahead of the Budget with the Tories arguing it will be a "day of reckoning" for the government.

Shadow chancellor George Osborne said the Budget, expected to confirm a likely 3% fall in the economy in 2009, would "lay bare" Labour's failings.

But in an upbeat message on YouTube Chancellor Alistair Darling said the UK economy had "underlying strengths".

And Labour said the Budget would focus on efforts to "go for growth".

Three days ahead of the Budget, the chancellor said his twin goals were to provide help for people struggling to make ends meet and to prepare the UK for the recovery when it arrives.

George Osborne: 'We'll see the worst public finances since the Second World War"

"We have underlying strengths we can play to. We want to build on them so there are jobs and good prospects for the future," he said in a short message posted on the video sharing site.

He added: "There are huge opportunities and I want to make sure we are ready and prepared to take advantage of them."

The Conservatives, meanwhile, have been keeping the pressure on the chancellor, saying he will have to admit on Wednesday that his previous economic forecasts about the depth of the recession were way off the mark.

In last autumn's pre-Budget report, the chancellor forecast the economy would contract by between 0.75% and 1.25% in 2009.

Experts believe he could now revise this to a projected drop of between 3% and 3.5% - which would be the worst recession since 1945.

However, Mr Darling is expected to say the economy will return to growth next year and gain further strength in 2011.

Analysis by the respected Ernst & Young Item Club suggests the economy will shrink by 3.5% this year but will have begun to turn the corner by early 2010.

Recession forecasts

Mr Osborne told BBC One's Andrew Marr Show the Budget statement would be a "truly dramatic moment in which the economic carnage of the last 10 years will be laid bare".

"It will be a day of reckoning and I think you are going to see the Chancellor forecast the longest recession that Britain has had since World War II."

He added that the UK's public finances "were not just the worst in the world but the worst since World War II".

Mr Darling should focus on how to reduce government debt rather than "short-term political pressures" ahead of a likely election in 2010, he added.

Lord Mandelson on the need to 'get growth resumed, to get jobs created once again'

The Conservatives have said Labour's borrowing - which in November was forecast to hit £78bn this year but is now expected to be much higher - is reckless and will leave a whole generation saddled with debt.

Ministers say the sharp rise in borrowing is needed to support the economy through the downturn and protect jobs while stressing the UK must live within its means in the medium term.

This has led to speculation that Mr Darling could pay the way for a range of likely tax rises and spending cuts on Wednesday.

Mr Osborne has said Labour's pledge to increase public spending by 1.1% next year was "unrealistic" and people should be prepared for a "very serious period of spending restraint".

The Conservatives were reviewing government spending programmes across the board, he stressed, although he added that he had not ruled out future tax increases as well as means of bolstering the public coffers.

"I understand how tough it is going to be but it is necessary," he said of likely spending constraints in the future.

'Sensible'

Lord Mandelson said the Conservative approach would lead to "savage cuts" in public spending.

Labour must show, in the Budget, that its fiscal policy was "sensible and responsible", the business secretary argued.

The reason borrowing is going up is to pay for the costs of the recession
Lord Mandelson

Debt levels were a matter of concern, he acknowledged, but were justifiable in the short term because of the exceptional economic conditions the country was facing.

"The reason borrowing is going up is to pay for the costs of the recession and to get us through it as quickly and painlessly as possible," he added.

He said the best way to rebalance the public finances was to get the economy moving again and the Budget would set out plans to "go for growth".

For the Lib Dems, Vince Cable said the UK was in the midst of an economic crisis and ministers must do more to free up bank lending and stem the spiralling rise in unemployment.

"Now the challenge is to face up to the sheer scale of something we have never had in our lifetime, which is complete collapse of the banking system and all that flows from that," he said.



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