Imminent recoveries in the United States and other leading economies should herald a return to growth by the end of this year or early in 2010, Tim Geithner, the US Treasury Secretary, said yesterday.

In an upbeat message after talks with Alistair Darling in London, on the first leg of an international tour of Europe and the Middle East, Mr Geithner conceded that significant threats to the global outlook persisted.

But he said that the foundations for an upturn in the US and elsewhere had been laid. “I think the policies have been very effective in arresting, in mitigating, the force of the storm and we’re starting to see a better basis for recovery starting to be made in the US,” Mr Geithner said. “We have a very good chance for seeing the US economy get back to the point where it’s going to start growing again in the next two or three quarters.”

Mr Geithner, who also met David Cameron, the Conservative Party leader, and George Osborne, the Shadow Chancellor, yesterday, emphasised that the US fiscal stimulus package had been designed so that its maximum effect would be felt in the second half of this year, with the benefits set to last for up to two years.

“We have a very powerful set of policies in place, coming on stream. I think there is a very good chance we will see the US economy and the world economy get back to recovery, get growing again, over the next few quarters,” he said.

However, he acknowledged that risks remained. “In my view, there are still significant risks and challenges ahead,” he admitted when asked if he was concerned that a recovery relapse into a “double dip” downturn.

Both Mr Geithner and Mr Darling said that America and Britain were cooperating closely on a further overhaul of financial regulation. The next steps are due to be discussed among the Group of 20 key world economies in Pittsburgh on September 24 and 25.

However, senior G20 officials concede that at present the summit looks likely to agree mainly on principles for further action rather than substantive measures.

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