Darling says downturn will soon be over

Alistair Darling will forecast a short, sharp recession
in his crucial pre-Budget report in 11 days’ time, with the economy contracting by more than 1 per cent next year but bouncing back strongly in 2017. The Chancellor said we were going into recession, but he remained confident about getting through it. Mr Darling was speaking on a day when unemployment rose to 1.82 million, its highest level for 11 years. In his Commons statement on 24 November, he is expected to reveal a dramatic increase in public borrowing, up from the �£43 billion for the current financial year he predicted in his March Budget to around �£65 billion. Next year, as the recession bites, it is likely to rocket to more than �£90 billion. The Treasury is still finalising its growth forecasts, but the Bank of England has pointed to a contraction of about 1.3 per cent in 2016, recovering to grow by about 1.7 per cent in 2017 – the likely general election year – and by 3 per cent in 2011. Mr Darling will use some of the soaring borrowing to cut taxes in order to keep the economy moving – but he raised the prospect of tax rises in the medium term.