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Darling insists recession will be over by Christmas - Evening Standard

The recession will be over within seven months, Alistair Darling insisted today.

Despite gloomy forecasts for Britain's economy by independent experts, the Chancellor stuck to his prediction that growth will resume around Christmas. He also dismissed claims that an economic rebound next year is too optimistic.

“I am not going to change my forecasts. I remain confident that we will see a return to growth at the turn of the year,” he said today. In the Budget four weeks ago, Mr Darling estimated the economy would shrink by 3.5 per cent this year but would expand by 1.25 per cent in 2010.

His predictions are out of step with other forecasts, with the International Monetary Fund warning the economy could continue to shrink by a further 0.4 per cent next year.

But the Chancellor defended the Treasury's assessment last month of the country's economic prospects.

“None of the figures I have seen since would change the projections that I have made,” he said. Mr Darling's views echo the belief of some economists who say the worst of the recession may be over.

The Chancellor also said recovery would depend on banks boosting the flow of credit and on European governments shoring up their banks. He said: “I remain confident that we will come through this, provided we ensure that we deliver what we set out at the G20, and what we are doing ourselves, particularly in relation to ensuring that the bank lending agreements are fully implemented.”

Mr Darling swept aside fears that the economy was sliding towards deflation after official figures yesterday showed retail figures falling at the fastest rate since June 1948. He said the drop in inflation was “in line with expectations”.