Alistair Darling: Beating Back Disaster.(The Last Word)(Interview)

Byline: William Underhill

We used to talk 15 years ago about returning to full employment; people would laugh. We have made huge strides.

The timing of Alistair Darling's latest promotion was, at the very least, unlucky. A year ago he took over Britain's finances as chancellor of the Exchequer from Gordon Brown and, within weeks, the outlook for the British economy--once seen as a model performer in Europe--had darkened. With soaring oil prices, rising inflation and the credit crunch, an IMF report last week praised the country's record but cut its growth forecast for 2008 to 1.4 percent. In London, Darling spoke with NEWSWEEK's William Underhill. Excerpts:

UNDERHILL: By any standard, it's been a tough first year for a chancellor. Looking back, do you see the job as a poisoned chalice?

DARLING: If you wanted an easy life, you wouldn't be chancellor of the Exchequer. I chose to be here--and I'm very happy to be here.

This time last year the prime minister said the economy was in "as good as shape as could be" to weather the economic storm. Does that confidence seem justified now?

We are not complacent, but I think Gordon was quite right. Last year, this was the fastest-growing economy in the G7. Unemployment is as low as it's been since the mid-'70s. Although inflation is rising now, it's historically at a much lower level than we have seen in the past. In the '70s, it was in the high 20s [as a percentage] at one stage.