Darling predicts deep recession

LONDON (Reuters) - Britain's economy will contract by 3.5 percent this year, its worst performance for more than 60 years, but recover to grow by 3.5 percent in 2011, Chancellor Alistair Darling said on Wednesday.

In his pre-budget report in November, Darling forecast a 2009 contraction of around 1 percent but rapid deterioration in the economy since then meant a downgrade was inevitable.

Darling downgraded his previous forecast that the economy would grow by 1.5-2.0 percent in 2010, saying he now expected growth of 1.25 percent next year.

But from 2011 onwards, Darling was bullish and forecast growth of 3.5 percent.

"The action already taken here, and internationally, and the measures I will announce today, mean that I expect the economy to start growing again towards the end of the year," Darling told parliament in his annual budget address.

(Editing by Mike Peacock)