Chancellor Alistair Darling moved today to quash speculation that he was planning to print money to ease the impact of recession.

Chancellor Alistair Darling moved today to quash speculation that he was planning to print money to ease the impact of recession.

He told reporters during a visit to Liverpool: "Nobody is talking about printing money.

"There's a debate to be had about what you do to support the economy as interest rates approach zero, as they are in the United States. But for us that is an entirely hypothetical debate."

He added: "We are looking at a range of measures to support the economy, to support business and to help people. But nobody is talking about printing money."

He was speaking out after a comment he made in a newspaper interview prompted speculation that the Government was preparing to print billions of pounds of money to help boost the economy.

In the interview published yesterday, Mr Darling said he was considering a policy of "quantitative easing".

Any such move would require the Government to work "hand in hand" with the Bank of England, he added.

Mr Darling said: "Frankly, if you were to do anything further (than set interest rates close to zero) this is something that could only be done with the Treasury and the Bank of England working hand in hand, because the two responsibilities just become so close you have to operate together."

Extra Government cash could be used to buy assets such as Government or commercial debt, or private equities. The policy was used by Japan several years ago to stave off deflation - a general trend of falling prices which can lead to economic paralysis.

Shadow chancellor George Osborne accused Mr Darling of floating the idea "carelessly" in a move that risked losing the confidence of international markets.

Mr Osborne said: "The very fact that the Treasury is speculating about printing money shows that Gordon Brown has led Britain to the brink of bankruptcy.

"Printing money is the last resort of desperate governments when all other policies have failed.

"It can't be ruled out as a last resort in the fight against deflation, but in the end printing money risks losing control of inflation and all the economic problems that high inflation brings.

"And to float the idea carelessly is irresponsible in the extreme as it risks losing the confidence of international markets."

In the interview,published in the FT, Mr Darling also said the country was "far from through" the current economic problems.

In his Pre-Budget Report (PBR) in November, he predicted that output would fall in the UK for the first two quarters of this year, then start to recover.

Mr Darling said this projection was "based on the evidence we had at the time".

Noting that the economic outlook remained "difficult", he said: "In the current climate, no responsible finance minister could say that's the job done, far from it. We are far from through this.

"This year is going to be difficult. There are going to be some tough calls."