Vladimir Putin, Russia’s new Prime Minister, has promised to transform his country into a leading economic power and he predicted that its economy would be larger than that of the UK by the end of this year.

In a fervent speech to the Russian Parliament, Mr Putin, who handed over the country’s presidency the previous day to Dmitry Medvedev, said that he would cut oil taxes to stimulate growth and predicted that Russia would overtake Britain to become the sixth-largest economy this year.

His comments caused the stock price of Gazprom to surge higher, making the Russian utility the third-largest company in the world, pushing aside China Mobile and GE, the American industrial giant, which slumped to fifth place. Gazprom, which supplies a quarter of European gas demand, was valued by the stock market yesterday at $348 billion (£178 billion), surpassed only by Exxon-Mobil and Petrochina, worth $468 billion and $446 billion, respectively.

Mr Putin boasted that during his eight years as President, Russia “had not just changed but become a different country”. After a decade of growth since the financial crisis in 1998, Russia was the seventh-largest economy in the world and growing.

“I am sure that Russia should become one of the main financial centres in the world,” he said.

The ranking is based on forecasts by the International Monetary Fund of economic growth according to purchasing power parity, a method that eliminates price differentials to take account of purchasing power.

Mr Putin vowed to tackle inflation, fight corruption and bring down taxes in a speech that differed from the low-key inaugural presidential address delivered by Mr Medvedev.

Christopher Granville, a Russian analyst for Trusted Sources, said: “It was scripted to show he was dealing with prime ministerial stuff, the nitty-gritty economy, while the President does the high-flown policy.”

Mr Putin promised to cut oil taxes, which will be welcomed by foreign investors in Russia, such as BP, which complain that the heavy government toll on oil producers is a disincentive to the drilling of wells. He also pledged to tackle inflation, which is running at an annualised rate of about 14 per cent. Hefty price increases in food staples have aroused fears of labour unrest, and Mr Putin said that he wanted to reduce the rate of price increases to single digits within a few years.

Mr Granville said: “It is the first significant steer that the do-nothing policy of ignoring inflation will change. The market is now expecting a revaluation of the rouble.”

Faltering growth in oil output among producing nations, such as Russia, is a factor in the recent surge in the price of crude oil. The International Energy Agency has forecast that Russia’s crude output will plateau by 2010 because of a lack of investment.

The Prime Minister appeared to acknowledge the problem when he addressed legislators in the Duma. He said: “The revenues of oil companies are not low, but you and I take a significant part of their profits into the budget . . . We need to take lower taxes in this sector.”

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