UK downturn deeper than feared

Britain's economic downturn is likely to be deeper and last longer than originally feared and it might turn out to be the worst for 60 years, its finance minister said yesterday.

Chancellor of the Exchequer Alistair Darling's frank comments in a newspaper interview suggested concern at the top of the government that the economic slide will make it difficult for Prime Minister Gordon Brown to recover ground and fend off a resurgent opposition Conservative Party.

Brown's Labour government has seen its opinion poll ratings plummet in the last six months and it is now languishing 21 points behind the Conservatives.

A national election must be held by mid-2010 at the latest.

Darling told the Guardian newspaper that the government had failed to get its message across and would battle to persuade a sceptical electorate it deserved another term in power.

The Guardian quoted Darling as saying economic times for the country were "arguably the worst they've been in 60 years".

"I think it's going to be more profound and long-lasting than people thought," he said. His comments came just days before a planned package of measures designed to buffer the economy and help the government regain the political initiative.

"We've got our work cut out. This coming 12 months will be the most difficult 12 months the Labour Party has had in a generation, quite frankly," Darling said.

"We've got to rediscover the zeal which won three elections, and that is a huge problem for us at the moment. People are pissed off (angry) with us."

The BBC called the interview an "astonishing intervention" and reaction from opposition politicians was swift.

Conservative economy spokesman George Osborne chided Darling for "letting the cat out of the bag" about the real state of the economy while Liberal Democrat spokesman Vince Cable called Darling's comments a "scarcely concealed attack" on Brown himself.

The bleakness of Darling's assessment of the economy marks a departure from his previous line that Britain's flexible labour market left the country well placed to withstand the global credit crisis.

Justifying his sharp tone, Darling said honesty was the best way of dealing with the credit crisis.

"We've got a credit crunch, the like of which we have not seen in generations," he told the BBC. "That's why it's necessary for us to support the economy and help people get through these difficult times."

Some commentators suggested Darling was massaging the public ahead of a wide-ranging economic package next week.

The package will include help for Britons struggling with plunging property values and soaring fuel bills. Brown is expected to kickstart his political fightback on Tuesday with a scheme to enable first-time homebuyers borrow money for a deposit from local councils.

Later in the week he will announce a fund, based on contributions from energy providers, to help families make their homes more energy efficient. Some ministers have argued the government should go even further and impose a windfall tax on energy companies but this looks unlikely at this stage.