Government denies rift over economy

Gordon Brown today brushed off speculation about the future of Chancellor Alistair Darling following his warning that the economy was facing possibly the worst downturn in 60 years.

The Prime Minister, attending the EU emergency summit on Georgia in Brussels, told reporters: "We are getting on with the business of government."

Mr Brown emphasised that the current economic difficulties were due to the "unique circumstances" of the trebling of world oil prices combined with the international credit crunch.

"We are showing that, unlike previous governments that could not manage a way through these difficulties successfully, that we are resilient in the way that we deal with these problems," he said.

"I think that you will find that the actions that we have taken and the actions that we are taking are actions that are designed to help the British people get through what is a difficult world economic downturn."

Mr Brown's comments came after Conservative leader David Cameron accused the Chancellor of "talking the economy down".

In an interview published in The Guardian on Saturday, Mr Darling admitted voters were "p***** off" with the Labour Government and said economic conditions were "arguably the worst they've been in 60 years".

Although he later took to the airwaves to insist he was referring to international conditions and not the state of Britain's domestic economy, his startlingly negative comments sparked speculation that he would have to slash his forecast for economic growth in the upcoming Budget.

Commentators said he may have put his job on the line in any reshuffle by risking overshadowing the political fightback campaign planned by Mr Brown for the coming weeks.

Mr Cameron told BBC Radio 4's Today programme: "It's an extraordinary situation that we've got a Chancellor of the Exchequer effectively talking the economy right down."

The Tory leader added: "As we stand at the moment, I think it is too difficult to say whether this is the worst situation for 60 years.

"I think it's extraordinary that the Chancellor said it - because the Chancellor of the Exchequer has got to think not only 'I must tell the truth at all times' but also 'I must use my words carefully so that I don't create a situation that's even worse'."

Downing Street rejected reports of tension between Mr Darling and Mr Brown over the comments.

Mr Brown's spokesman insisted the Prime Minister has "full confidence" in his Chancellor and was working closely with him on a package of measures designed to help those hit by rising prices and the sluggish housing market.

Mr Brown will tomorrow join Communities Secretary Hazel Blears to unveil new help for first-time home-buyers and people facing the risk of repossession, and further announcements are expected shortly to ease the pressure of high fuel prices.

The Prime Minister is expected to paint a rosier picture of Britain's economic prospects when he addresses the CBI on Thursday.

According to The Guardian, he will say: "In the next 20 years, the world economy will double in its size and wealth and we have a great opportunity to win new business, new jobs and prosperity for Britain."

Mr Brown has long been expected to use the early weeks of September to set out an economic recovery package designed to allay voters' concerns over the credit crunch and rising prices and shore up Labour's standing in the polls ahead of the party conference season.

Looking ahead to the expected announcements on housing and fuel, his spokesman said today: "We have already taken action in relation to housing and the mortgage market. We have already taken action in relation to helping people with their fuel bills. As the Prime Minister and other ministers have been saying in recent weeks, we want to continue to see what more we can do to help those affected."

Meanwhile, Schools Secretary Ed Balls brushed off suggestions that he was angling for Mr Darling's job.

Launching a new curriculum for under-fives, Mr Balls said: "I think we've got a really good Chancellor in Alistair Darling and I can't think of any more important job I could have than making sure that the children in our country are equipped to learn."

He added that Mr Darling was "right" to "set out the challenges we face but also that we've got the strengths and experience and confidence to deal with difficult times".

Asked later by Channel 4 News whether Foreign Secretary David Miliband was after the Prime Minister's job, Mr Balls said: "I've known him (Miliband) for very many years and I know that he is a sensible, rational, sane politician, and a good guy, and I don't think that he would ever do anything so crazy, destructive and divisive, and that is why I am totally confident that's not what he was doing."

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