Darling forecasts economic growth

Mr Darling was speaking as finance ministers from the G8 states issued a joint statement suggesting that they believe the worst of the recession may be over.

The communique produced after the G8 finance ministers' meeting in Lecce, Italy, highlighted the need to prepare "exit strategies" to unwind emergency economic measures once recovery is under way.

This will involve rolling back state fiscal stimulus programmes and taking action to pay off the massive debts incurred to fund the global response to the credit crunch.

But there were differences between the ministers over how quickly state spending could be scaled back and interest rates increased without stifling the world's emergence from the most dramatic economic downturn since the 1930s.

The communique - signed by finance ministers of the UK, US, Russia, Germany, France, Canada, Japan and Italy - acknowledged that unemployment may carry on growing even after output begins picking up, and said that action to counter joblessness will continue to be needed.

The ministers said: "There are signs of stabilisation in our economies, including a recovery of stock markets, a decline in interest rate spreads, improved business and consumer confidence, but the situation remains uncertain and significant risks remain to economic and financial stability."

US Treasury Secretary Timothy Geithner said: "The force of the economic storm is receding. There are encouraging signs of stabilisation across many economies."

Mr Darling said he stood by his forecast in April's Budget that the UK economy would return to growth by the end of the year, though he warned that the recovery may be affected by rising oil prices.

"What I said in the Budget holds, that we'll start to see a return to growth towards the end of this year," Mr Darling told the Reuters news agency.