Page last updated at 00:18 GMT, Wednesday, 27 January 2010

Alistair Darling says 'right decisions' ended recession

Alistair Darling
Mr Darling said unemployment would have been higher without his actions

The UK economy has left recession because the government took the "right decisions", Chancellor Alistair Darling has insisted.

But Mr Darling admitted to the BBC's Newsnight that "it took us longer than it should have" to recognise problems in the financial services industry.

He warned that there were "a lot of bumps in the road still to be negotiated" on the way to recovery.

Shadow chancellor George Osborne has said that growth remains "very weak".

'Lot of uncertainty'

Figures on Tuesday showed growth by a weaker-than-expected 0.1% in the last three months of 2009, after the economy contracted for six consecutive quarters.

The UK's had been the last major economy still in recession.

Mr Darling told Newsnight that this was because of the size of the UK's financial services industry.

What we and other countries have done has stopped the recession from turning into a depression
Alistair Darling
Chancellor of the Exchequer

But he insisted that government actions such as the car scrappage scheme had made a "substantial" contribution towards ending the downturn..

"What we and other countries have done has stopped the recession from turning into a depression, which it would have done if we'd chosen to do nothing as the Tories were advocating," he said.

"Most economists will say that that has made the difference to what we're doing, and had we not done so then I think we would have seen that unemployment would have been higher, we'd have seen more repossessions, we'd have seen more business failures, as you saw in the 80s and 90s."

But he warned that "we need to be cautious because there's an awful lot of uncertainty around", adding that "the figures today bear that out".

He also admitted: "If you look back there's not an individual or a government in the world who can say they got everything right.

"I think if you go way back right at the start, I think that it took us longer than it should have done just to realise how profound the problems were in the financial services industry - the interconnected nature of the financial dealings, and so on."

'Very weak'

The UK recession began in the April-to-June quarter of 2008, and was the longest UK recession on record.

During 18 months of recession, public borrowing increased to an estimated £178bn, while output slumped by 6%.

The economy is only just staggering back into growth
Vince Cable
Liberal Democrats

Shadow chancellor George Osborne told the BBC that a "new model" of growth was still needed for the UK.

He added: "Let's be clear - we were badly prepared for this recession and now we're badly prepared for the recovery under the current government "

Liberal Democrat Treasury spokesman, Vince Cable said the markets would be surprised that growth had been markedly slower than expected.

"Far from the quick recovery the chancellor has been praying for, the economy is only just staggering back into growth," he said.

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