Trust in Tories slides as George Osborne blames Europe for Britain's double dip

The Conservatives have lost their lead over Labour on economic competence as doubts grow about the "austerity strategy" pursued by the Coalition and governments across Europe.

Attempts by George Osborne, the Chancellor, to blame Britain's return to recession on the eurozone crisis were undermined by official figures showing that the German economy grew by 0.5 per cent in the first three months of this year, while France escaped recession by flatlining at zero growth.

Speaking in Brussels, Mr Osborne insisted the uncertainty over the euro and the troubles in Greece were having an impact in Britain. He said: "This is a time of considerable uncertainly in the eurozone economies and that uncertainty is undermining the entire European recovery and we are reaching a point where we have to make a decision. We have to see the eurozone standing behind their currency."

Ed Balls, the shadow Chancellor, said: "With Germany, France and the eurozone as a whole avoiding recession, it's now clear that Britain's double-dip recession was made in Downing Street by David Cameron and George Osborne's failed economic policies. As even the credit rating agencies now recognise, extreme austerity is self-defeating."

Labour has trailed the Conservatives on economic trust since the 2010 election after many voters blamed the deficit on the last Labour Government. But two polls published yesterday found that the two main parties are now running neck and neck on the issue.

YouGov showed that 27 per cent of people regarded Labour as the best party to handle the economy, while 26 per cent opted for the Tories, the first time they have not been ahead on the issue since the election. Only 8 per cent named the Liberal Democrats.

Ipsos MORI gave the Tories (on 31 per cent) a tiny one-point lead over Labour on the economy – down from the 10-point advantage they enjoyed last September. It also showed that Mr Cameron and Nick Clegg's personal ratings have slumped to a record low. The Prime Minister has a net approval rating –the number of people satisfied with his performance minus those dissatisfied – of minus 28 per cent, while Mr Clegg's is down to minus 39 per cent. Ed Miliband remains little changed on minus 16 per cent.