2009 was worse than Darling realised. D’oh!

Britain may be on the cusp of emerging from recession but Alistair Darling is set to announce what many know to be startlingly obvious: the economic contraction through 2009 has been deeper than he previously predicted.

In next month's pre-Budget report, Darling is expected to say the UK economy shrank 4.75 per cent in 2009 - a full one-and-a-quarter per cent greater decline than he forecast in April - and GDP will probably only grow 1-1.5 per cent next year, down from the Bank of England's 2.2 per cent estimate.

The Conservatives suspect Darling could be putting out an overly pessimistic forecast only to revise it upwards in the weeks before Brown calls an election in the spring. In the Commons yesterday, Darling refused to offer precise forecasts: "I'm confident we're coming out of this and I believe we will see growth at the turn of the year."

But with Britain trailing the US, Japan and most of western Europe out recession, public finances are likely to remain massively out of balance. The slump in the tax-take from financial services and property investment has forced record declines in tax revenue. The Office for National Statistics said that the Government borrowed £11.4bn in October - the most ever for that month. The UK's 2009 public sector shortfall could easily total £200bn for this year, according to independent estimates.

But with Dubai's startling debt crisis pregnant with potential to set off a cascade of new global economic shocks, the Chancellor's downgraded 2010-2011 growth projections could easily turn out to be optimistic. Yesterday, fear over Dubai's true economic situation caused the FTSE to lose almost £44bn in value.

US markets are expended to mirror the decline when they open today after the Thanksgiving holiday. But even this may not be the crucial test. Today is the mis-named Black Friday, the start of the all important US Christmas shopping season. A strong showing by consumers today could boost global economic sentiment. But few are predicting miracles. ·