Britain faces an "enormous economic challenge" in 2009 but it must also grasp opportunities for future growth, prime minister Gordon Brown said today.
The year ahead "won't be easy," Mr Brown warned in a New Year's message, but he voiced optimism that people would respond to the challenge.
"We can meet the security challenge, the environmental challenge and the enormous economic challenge," he said.
Britain is sliding into recession after being hard hit by the credit crunch. The economy contracted at its sharpest rate since the early 1990s in the third quarter of 2008.
Mr Brown's government has been forced to step in to nationalise two banks and to take stakes in several others.
The scale and speed of the global financial crisis had been almost overwhelming at times, Mr Brown said, leaving people "bewildered, confused and sometimes frightened".
Mr Brown, long a champion of "light-touch regulation" for London's financial district, said 2008 was the year in which "an old era of unbridled free market dogma was finally ushered out".
He said that, despite the downturn, there were great opportunities, singling out the technology, environment and transport sectors as potential growth areas.
"We must prepare ourselves for these massive opportunities as the world economy doubles in size over the next two decades," he said, pledging to work with US president-elect Barack Obama to create a "global coalition" to tackle climate change.
Reuters