Darling: My policies prevented economic depression

Government action to help the economy staved off depression during the worst of the downturn, Chancellor Alistair Darling claimed today.

And he told a conference of business leaders in Edinburgh today that the forthcoming Budget would focus on growth.

The UK economy officially emerged from recession last month with growth of 0.1% and Mr Darling said he was confident this trend would continue in the coming year.

"If you look at the immediate problems we face, then public spending in our country and most other countries has stopped this recession from being being much deeper than it would otherwise be, and maybe even turning into a depression," he said in response to questions.

Despite confidence returning, Mr Darling said there had yet to be any "significant increase" in private sector investment.

"I think we will start to see stronger growth. We'll see 1-1.5(%) this year and we'll see growth picking up again next year."

The role of Government would be "critical" in helping recovery.

"While the private sector slowly recovers, it is only Government that can do what needs to be done now: supporting the economy, helping business, keeping people in work and in their homes," Mr Darling said in his speech to delegates.

"We are now out of recession but there are still risks ahead of us, as the economy gradually recovers."

Britain's businesses, from multinationals to the start-ups, would generate wealth and further steps would be taken to help them, the Chancellor said.

"In the Budget next month, my main focus will be growth. I will take steps to provide the country with a strong platform to generate opportunity and jobs in the future."

He also stressed the need to ensure safe energy supplies, including in renewable and nuclear energy.

A new body, Infrastructure UK, will report to him at the Budget with a strategy for the country's infrastructure.

Entrepreneur Hermann Hauser is to look at how innovation networks in the UK can be improved to generate more commercial ideas and develop early-stage businesses.

Mr Darling acknowledged concerns over high public spending levels but said Government spending provides "vital demand" when the private sector struggles.

"Pull away that support too soon or too rapidly and you hurt growth, reduce the tax take, push up benefit spending and eventually make borrowing worse," he added.

The UK has the most ambitious deficit reduction planned of any G7 economy, Mr Darling said.

"The case for maintaining public spending until recovery is established is overwhelming."

Financial services and the North Sea oil and gas sector are both important for economic recovery, Mr Darling went on.

He said the outcome of the election would shape the country for the next 20 years, and a Tory victory would jeopardise recovery.

"It is, I think, a choice between growth and prosperity, or resigning ourselves to a decade of austerity, low growth and low employment.

"The world has changed profoundly in the last two years. The role of Government has changed. We won't get the change we need unless Government plays its full part."