Gordon Brown was battling to contain cabinet indiscipline last night after Alistair Darling undermined his fightback with a devastating forecast for the economy. The Chancellor was unrepentant over a warning in an interview yesterday that the country is on the brink of the worst economic crisis for 60 years. The fresh infighting came as the 'IoS' learned that Stephen Carter, Mr Brown's high-profile strategist, is to leave his job after a bitter turf war inside Downing Street.
The public relations guru's move to a lower-key role is a victory for the Prime Minister's long-serving advisers, who have have clashed with Mr Carter, but will deepen the sense of a Government in crisis. Less than a month after David Miliband infuriated Mr Brown by setting out his stall as a leader-in-waiting, Mr Darling repeatedly refused to deny that there would be a leadership challenge this autumn.
Asked in a TV interview whether he thought the Prime Minister's position was safe, he said only: "I think Gordon Brown will do a very good job."
In an interview with The Guardian, Mr Darling ignited speculation that he could resign from the Cabinet when the Prime Minister holds an autumn reshuffle. Mr Brown was said to be furious at the sudden intervention from the usually loyal and steady Mr Darling. It threatened to overshadow a planned re-launch this week, which will focus on giving more help to families struggling with the rising costs of housing and fuel.
In echoes of Geoffrey Howe's devastating attack on Margaret Thatcher, Mr Darling told The Guardian: "In 10 months we've gone from doing OK to certainly not doing OK. We patently have not been able to get across what we are for, and what we are about."
Friends of the Chancellor have made it clear that he does not want to be made the "scapegoat" for an imminent recession which could hasten Mr Brown's downfall.
Downing Street said it was "totally relaxed" about Mr Darling's failure to address the question of leadership challenges. But an official pointedly refused to agree with Mr Darling's assessment that the economic crisis is the worst for 60 years. "The Prime Minister agrees it is a very challenging international economic situation."
The Prime Minister will join the Foreign Secretary in Brussels tomorrow for an emergency summit on the crisis in Georgia in their first meeting since Mr Miliband's challenge to Mr Brown's authority a month ago. Rescue plans for housing and fuel poverty will be unveiled later in the week.
George Osborne, the Shadow Chancellor, said: "This weekend, on the eve of the launch of Gordon Brown's heavily trailed recovery plan, the Government's economic position is falling apart almost hour by hour. Whether he meant to or not, the Chancellor has blurted out the truth about the dire state of the economy and told us in crude but enduring terms what the British people really feel about Labour.
"Either Gordon Brown must back up what Alistair Darling has said or it will be clear to everyone that the Chancellor no longer commands the confidence of the Prime Minister."