Alistair Darling is confident that the UK will avoid recession. He expects UK economic growth to slow down this year by a third to between 1.75% and 2.25% – but that would be faster than most of our major economic competitors, and is likely be massively better than the US, which may already be in recession.
But he acknowledges that this is no time to take money out of the economy through tax increases that bite with immediate effect. The main impact of tax increases will be after 2009.
So in 2008-9, he forecasts a relatively sharp increase in public borrowing to £43bn.
That won’t be seen by many as disastrously high, but still more than would be ideal at a time when the economic outlook is highly uncertain.