PBR: Darling says economy will boom again in 2011

The Chancellor says he is confident the UK’s economy will boom in 2011 after returning to growth in 2010.

Announcing his Pre-Budget Report today, Alistair Darling pledged to continue supporting the economy to promote economic growth.

Darling stood by his prediction in April, saying the UK's GDP will grow by between 1% and 1.5% in 2010, rising to 3.5% in 2011 and 2012.

He says the UK economy will have shrunk by around 4.75% this year, though the Treasury expects the economy to begin expanding again in the fourth quarter.

In the future, Darling says the financial services sector will not be as important to the UK economy in the future, though he says it will still have a major role to play.

Darling believes Government action since the onset of the financial crisis has dampened the impact of recession.

He claims unemployment has increased much less than expected by independent analysts, and four times as many people would have lost jobs if unemployment reached the same rates seen in the 1980s.

Empty Property Relief has been extended to 2011, while a 1p rise in corporation tax for small businesses has been deferred to an unspecified date.

However, the Chancellor says he will not extend a VAT reduction and the basic tax on goods will return to 17.5% on 1 January, despite pressure from retailers.

"To cut support now could wreck the recovery, and that's a risk I am not willing to take" he says.

The Basic State Pension will continue to rise at its minimum rate of 2.5% in April, despite low inflation.