Mandelson sees recession ending

By Matt Falloon

LONDON (Reuters) - The recession in Britain is coming to an end but public spending will need to be constrained over the next decade, business minister Peter Mandelson said on Tuesday.

Mandelson also said there was little prospect of Britain adopting the euro if Labour were to be re-elected at the next election due by mid-2010.

"The fall in the economy is coming to an end but the severity, obviously, is not yet behind us," Mandelson told reporters.

"Of course, there will be pressures on spending until 2011 and constraints for the next decade."

Some economists argue Britain is already emerging from recession -- the first among major economies to do so -- but policymakers have been more cautious, concerned that a dearth of bank lending will hold back any recovery.

In April's budget, the Treasury forecast growth would resume towards the end of the year.

Mandelson said it was vital to maintain government spending and investment during the downturn but said, in the future, there would be "less spending" in some areas with the government prioritising frontline services.

"Of course, we have to continue to prioritise within departments and across the board," he said.