Darling's Budget stakes everything on an early end to recession

Apr 23 2009 by Adrian Pearson, The Journal

ALISTAIR Darling last night staked his reputation and the country’s finances on hopes the economy will be out of the recession by the end of the year.

In his Budget statement the Chancellor announced plans to borrow a record £175bn amid expectations that the economy will shrink by 3.5% in 2009

As a result public debt will reach almost 80% of GDP in the next six years, nearly double the 43% rate when Labour first came to power.

Duty on cigarettes and alcohol will rise by 2% and fuel duty will rise by 2p per litre from September.

There were some hopes for the region as the Chancellor promised an extra £525m for offshore wind amid promises to support clean coal technology being pioneered in places such as the North East.

But this spending, and the repayment of the largest public debt since the Second World War, is dependent upon the economy returning to growth in 2010, a claim Mr Darling made to a surprised House of Commons.

And high earners will have to shoulder a greater part of that debt as a new 50p top rate of tax is introduced. In a stark Budget statement, the Chancellor said: "There are no quick fixes. No overnight solutions.

"But because of the progress we have made, here and internationally, we can begin to restore confidence, save jobs, and bring the world economy more quickly out of recession."

Conservative leader David Cameron accused the Government of ruining the economy.

He said: "This is not just boom and bust. It is the worst boom and bust ever."

"This Government has given us a decade of debt. It has run out of money. It has run out of moral authority. What is the point of another 14 months of the living dead?"

James Ramsbotham, North East Chamber of Commerce chief executive, said the measures announced yesterday were just not good enough.

He said: "Alistair Darling promised a lean, mean and green Budget focused on job creation but today’s Budget lacked any blockbuster initiatives that will make a substantial difference. However, it did contain a raft of potential opportunities for the North East to capitalise upon".

He added that the North East had a "real and credible case" to be at the forefront of efforts to pilot carbon capture and storage.