Darling: Economy faces biggest test for a decade

The chancellor has warned the economy is facing its biggest test for ten years.

But Alistair Darling called for confidence in the UK economy, insisting it was well-placed to weather the global economic downturn.

In a speech to the Euromoney Bond Congress in London, Mr Darling acknowledged growing concerns of a US recession and admitted the Treasury does not know the impact this will have on the UK.

His warning came as the Bank of England’s deputy governor Rachel Lomax said the current banking crisis “must surely be the largest ever peacetime liquidity crisis”.

Speaking in London, Mr Darling said: “We all recognise that the global economy is facing its biggest test in more than a decade… These are uncertain times. We do not yet know the full extent of the slowdown affecting the United States.”

But he called on investors to have confidence in the UK economy, insisting it was “more resilient than any of the major advanced nations to the shocks of the past decade”.

He continued: “Here in the UK, our economy remains strong and stable; we were the fastest growing economy in the G7 last year. Growth has remained stable and close to trend for the past two-and-a-half years.”

Mr Darling is scheduled to deliver the Budget on March 12th, making his debut among a considerably less optimistic outlook than his predecessor’s decade-long period of growth.

The chancellor said he would use the Budget to continue “to take the decisions necessary to ensure the stability of the economy”.