Government to borrow to revive economy

BIG BILL

To pay for Britain's stimulus package, Darling said Britain's public borrowing would balloon to 118 billion pounds in the next financial year, about 8 percent of GDP and way above the 38 billion pounds he forecast in March.

Gilt issuance will rise to 146.4 billion pounds in 2008/9 from an initial 110 billion pound estimate.

Darling slashed his economic forecasts to 0.75 percent growth this year and to a contraction of between 0.75 percent and 1.25 percent next year. In March, he foresaw growth of about 2 percent this year and around 2.5 percent in 2009.

However, that is still more optimistic than many economists.

"We are massively concerned that it's a question of live now, pay later and we don't think the strength of the economy warrants it," said David Buik, analyst at BGC Partners.

Darling's fiscal boost is being matched, in some shape or form, across much of the world as the global economy sours.

The European Commission will present plans on Wednesday to boost the EU economy, and U.S. President-elect Barack Obama has laid the ground for a massive new U.S. stimulus package, combining middle-class tax cuts and infrastructure spending.

To persuade markets the government will balance the books once the economy improves, Darling announced plans for deferred tax rises and public spending curbs.