Survival depends on the economy, Lib Dems told

The Liberal Democrats could suffer serious losses at the next general election if the Coalition Government fails to achieve economic recovery, the party's deputy leader conceded yesterday.

Speaking ahead of its annual conference, Simon Hughes said its electoral prospects – and the case for sharing power with the Conservatives – would depend on the health of the economy in 2015.

He said: "At the next election we will be judged by whether, relative to the rest of the Western developed world, we have steered our way through these difficult waters."

Mr Hughes said Nick Clegg had transformed the party's mood through his "robust" dealings with David Cameron over the summer, notably with his decision to veto Tory plans to cut the number of parliamentary constituencies.

He urged party activists not to be down-hearted by poor opinion poll ratings, pointing out that the next election was still more than two-and-a-half years away. "I have always taken the view that if, by the time of the next election, the economy is going in the right direction, unemployment is going down, employment is going up, growth is clearly happening, then the justification to go into coalition will have been made."

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