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Alistair Darling insists the recession will be over by Christmas, despite growing doubts over his economic forecasts.In an interview with the Times, the chancellor stuck by his predictions, even though other forecasters, including the International Monetary Fund, have published a much gloomier assessment of the economy. "I am not going to change my forecasts," Darling said. "I remain confident that we will see a return to growth at the turn of the year."In last month's budget, Darling predicted the economy would shrink by 3.5% this year and surprised the City when he forecast a rapid economic recovery, with growth of 1.25% in 2010 and the year after.

Since then, government figures have shown a shock 1.9% plunge in Britain's gross domestic product in the first three months of this year - the sharpest decline in almost three decades.The IMF does not share the chancellor's optimism and believes the economy will continue to shrink next year. It has forecast falls of 4.1% in output this year and 0.4% in 2010.

The chancellor shrugged off fears that Britain could slide into a deflationary spiral after figures yesterday showed retail prices plummeting at the fastest rate since 1948. The government's benchmark consumer price index, which excludes housing costs, still stands at 2.3%, above the Bank of England's 2% target. Darling said the fall in inflation "is in line with expectations. Deflation is something quite different".