January 7, 2009 | posted by Michael Baxter in UK economy |

Cast your mind back all the way to 25 November. That was the day that Alistair Darling stood centre stage, and revealed his Pre-Budget Report.

You may recall, it was something of a dry squib (that’s the opposite of a damp squib). Government borrowing was set to go though the roof, and then up a lot further still.

But there was a problem. Al assumed the economic downturn would come to an end way before the end of 2009.

Now, you didn’t need to be an economic genius to spot the danger here. It seems there weren’t many people who agreed with this forecast for the economy.

Well, that was then. Now, a full six weeks later, things look different. Even fewer people believe the economy will recover this year. But to this list of critics of the chancellor’s projections was a surprising new addition yesterday.

For now it appears among those people who believe the chancellor was a tad optimistic, is a certain Alistair Darling.

Talking to the FT, our silver chancellor said the economic crisis was “far from through”. He added: “In the current climate, no responsible finance minister could say that’s the job done, far from it,” and also said: “This year is going to be difficult. There are going to be some tough calls.”

Okay, we all knew that anyway, but it is interesting to note Al has woken up to this reality. Actually, that is a little unkind. It was, of course, Alistair Darling who warned that the global economy faced the most serious economic crisis in 60 years, at a time when most forecasters were still quite sanguine about the whole thing.

Lehman Brothers went a few days later, and it seems Hank Paulson had already given his British contemporary the nod, warning of the massive crisis building.

Interestingly, in his interview with the FT, Mr Darling seemed to hint that should the rate of interest fall to zero, the Bank of England would lose some of its independence. You may know, the talk now is of quantitative easing, of creating new money by buying government and corporate debt. The Bank of England had hoped to have control over this. But in his FT interview the chancellor said the government and Bank of England would have to work “hand in hand”.