UPDATE: UK Darling: Cautious That Worst Of Downturn Is Over

U.K. Chancellor of the Exchequer Alistair Darling acknowledged Sunday it isn't yet clear whether the worst of the U.K. recession is over. "I'm pretty cautious on that. I believe that we will see a return to growth by the end of the year. I said that in the budget and I haven't changed my view on that but...there is a lot of uncertainty out there," he told the British Broadcasting Corp.'s Politics Show. Among the list of potential hurdles Darling gave are the problems in European economies, like Germany and Spain, and the continued "difficulties" in the U.S. economy. He also said the U.K. economy will continue to face problems like rising unemployment. And Darling said he has continued concerns about the financial system in Europe. He said "we still have some European banks where I think there are still problems that need to be sorted out." "So there is a lot of uncertainty out there...I think we've got some way to go yet," he said. However Darling said the strong fiscal and monetary actions taken in many countries, "will make a difference." The Office for National Statistics said Friday that the U.K. economy contracted 1.9% in the first quarter - the third straight quarter of shrinking output. The government expects the economy will shrink 3.5% this year but will start to recover later this year. Some better-than-expected data earlier this month also bred optimism that the pace of economic contraction was decelerating. However, many private forecasters, as well as international organizations like the International Monetary Fund, think a recovery will take more time to begin than the government predicts and will be more fragile once it starts.