Darling bid to blame the world for UK troubles

The Chancellor today looked to blame global problems for the recession in Britain and outlined plans to borrow a staggering £458 billion over the next five years.

Alistair Darling told the House of Commons the UK "cannot insulate itself" from the turmoil in global financial markets and said the Pre-Budget Report came against "a background of economic uncertainty not seen for generations".

He forecast a fall in output in the UK of 0.75% to 1.25% in 2009 after growth of just 0.75% this year.

Inflation was projected to fall to just 0.5% by the end of next year as Britain suffers recession for the first time since the early 1990s.

Darling projected a return to growth of 1.5% to 2% in 2010 although the City warned this was optimistic. The more gloomy City forecasters reckon the economy will contract 2% next year and again in 2010 making it the worst recession since the early 1980s.

The economic picture painted by Darling was far more downbeat than he forecast in the Budget in March when he predicted growth of 2% this year, 2.5% next year and 2.75% in 2010.

Those figures were met with disbelief in the City and today's humiliating downgrade for 2009 was the biggest since the Treasury started projecting growth more than 30 years ago.

Philip Shaw of Investec said: "At the time of the last Budget we criticised the Treasury's forecasts for being unduly optimistic for 2009. The UK is undoubtedly in its first recession in 16 years."

The Chancellor today pledged to spend his way through the recession, sending borrowing over the next five years up to £458 billion. Borrowing will hit £78 billion this year and £118 billion next year before falling slightly to £105 billion in 2010-11, £87 billion in 2011-12 and £70 billion in 2012-13.

The figures dwarfed those published in March by £295 billion when the Treasury planned borrowing of £43 billion this year and £38 billion next year falling to £23 billion in 2012-13.