£20bn boost for ailing economy

The Chancellor told the Commons that the UK would be in recession by the end of the year - with output contracting over the course of 2009.

But he insisted that as a result of the measures he was taking that there would be a healthy recovery in 2010. He said that the Pre-Budget Report set out a "comprehensive plan" to deal with the effects of what was an "unprecedented global crisis".

He said that the measures he was taking would mean that the downturn would be "shorter and shallower" than would have been the case. But the Chancellor said that public borrowing was going to rocket to £78 billion this year and £118 billion the following year.

Mr Darling said overall growth this year would be just 0.75% - with a second successive quarter of negative growth in the final three months, the technical definition of a recession. Next year, he predicted the economy would shrink by between 0.75% and 1.25%, but would then bounce back in 2010 with positive growth of 1.5% to 2%.

The Chancellor's insistence that the UK economy faces global challenges "from a position of relative strength compared to the past" brought cries of derision from opposition MPs. He said it was right to relax rules on public borrowing. "In the current circumstances, to apply the rules in a rigid manner would be perverse and damaging. We would have to take money out of the economy, making a difficult situation worse."

The Chancellor said his Pre-Budget statement came against a background of "economic uncertainty not seen for generations". He went on: "I want to take fair and responsible steps to protect and support businesses and people now - while putting the public finances on the right path for the future."

He said: "My central objective is to respond to the consequences of this global recession on our country, both now and in the future, so that we are ready to take full advantage of the recovery of the world economy.

"My aim is to provide support and protection for families and businesses when they need it most. To maintain our commitment to investing in schools, hospitals and the nation's key infrastructure. And to put in place the measures necessary to ensure sound public finances in the medium term so that as a country we live within our means.

"Not one single initiative, but a comprehensive plan, to support families, business and the economy. And because of the wide ranging measures I am announcing today and the many strengths of the British economy, I am confident that the slowdown will be shallower and shorter than would have been the case."