Page last updated at 11:54 GMT, Friday, 26 February 2010

Chancellor says growth in UK economy is 'encouraging'

Alistair Darling: "It is absolutely essential to maintain support for the economy"

Chancellor Alistair Darling has said the upward revision in the UK's growth figures is "encouraging", but warned against cutting spending too soon.

Figures show the economy grew by 0.3% in the last quarter of 2009, better than the earlier estimate of 0.1%.

For the Conservatives, shadow chancellor George Osborne also welcomed the news, but said it strengthened his call to begin cuts.

Lib Dem Treasury spokesman Vince Cable said the economy was still "fragile".

The initial estimate of 0.1% growth released last month showed that the UK had emerged from recession, but only just.

This better-than-expected revision confirms the economy is in recovery, but analysts say there is still a chance it could contract again in the current quarter.

The recent recession was the longest on record in the UK and saw public borrowing increase to an estimated £178bn.

'Utter madness'

The chancellor told the BBC he welcomed the upward revision, but there was still "a lot of uncertainty" about the economy.

"What I say is that we are coming through recession, we are moving towards a recovery, but it's absolutely essential for us to maintain support for the economy.

The economy is still very fragile. This is not a good figure
Lib Dem Vince Cable

"To remove it now as the Tories suggest would be utter madness."

He said other European countries like Germany and Italy had seen growth slow or even contract, adding: "We're not out of the woods yet."

The prime minister's spokesman said Gordon Brown also welcomed the figures, but stressed there was no room for complacency.

The Tories have said there would be no "swingeing cuts" during their first year in government, but stressed that the UK should make a start now on cutting the deficit.

Mr Osborne said in a statement on Friday: "This upward revision of last year's growth figures is welcome.

"It strengthens the Conservative argument that we must now make a start on dealing with with the debts that Gordon Brown has run up.

"That is how we will bring back confidence to the economy and deliver a proper, sustainable, job-creating recovery."

But Mr Cable told the BBC growth was still a long way off what could be considered healthy.

"The economy is still very fragile," he said. "This is not a good figure. It was also buoyed up by the fact the VAT cut was still in place."

The "political significance" of the figures was that they reinforced the need for caution, he added.

"It underlines the folly of the idea of rushing into very rapid cuts in public spending which would, of course, send the economy back into recession and create an even bigger budget deficit."

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