Economy at 60-year low, says Darling. And it will get worse

In an exclusive interview, chancellor says Labour failing to communicate with voters

• Nicholas Watt, chief political correspondent
• guardian.co.uk, 
• Friday August 29 2008 21:45 BST
• Article history

Photograph: Junko Kimura/Getty images

Britain is facing "arguably the worst" economic downturn in 60 years which will be "more profound and long-lasting" than people had expected, Alistair Darling, the chancellor, has told the Guardian today.

In the government's gravest assessment of the economy, which follows a warning from a Bank of England policymaker that 2 million people could be unemployed by Christmas, Darling admits he had no idea how serious the credit crunch would become.

Darling's blunt remarks lay bare the unease in the highest ranks of the cabinet that the downturn is making it all but impossible for Gordon Brown to recover momentum after a series of setbacks.

The chancellor, who says that Labour faces its toughest challenge in a generation, admits that Brown and the cabinet are partly to blame for Labour's woes because they have "patently" failed to explain the party's central mission to the country, leaving voters "pissed off".

In a candid interview Darling warns that the economic times faced by Britain and the rest of the world "are arguably the worst they've been in 60 years".

To deepen the sense of gloom, he adds: "And I think it's going to be more profound and long-lasting than people thought."

The economic backdrop presents Labour with its toughest challenge since the 1980s. "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," he says. But Labour has been lacklustre. "We've got to rediscover that zeal which won three elections, and that is a huge problem for us at the moment. People are pissed off with us.

"We really have to make our minds up; are we ready to try and persuade this country to support us for another term? Because the next 12 months are critical. It's still there to play for."

Darling has some words of comfort for Brown when he predicts there will be no leadership challenge against the prime minister. He also reveals that Brown has no plans to carry out an imminent cabinet reshuffle as he delivers a defiant put down to critics who have said that he could be replaced as chancellor.

"You can't be chopping and changing people that often," he says. "I mean, undoubtedly at some stage before the end of the parliament he will want to do a reshuffle, but I'm not expecting one imminently. I do not think there will be a reshuffle."

Darling does not name names, but says some people want his job and have been trying to undermine him. Many in the Treasury believe that Ed Balls, the schools secretary, has been less than supportive. "There's lots of people who'd like to do my job. And no doubt," he adds, half under his breath, "actively trying to do it."

The chancellor's remarks about the economy - in an interview conducted over two days at his family croft on the Isle of Lewis - highlight the nerves at the top of the government after the loss of Labour's 25th safest seat in Britain in the Glasgow East byelection in July. The Tories are comfortably ahead in polls as leaders return on Monday after the holiday.

Darling, who speaks about how the prime minister is one of his oldest friends in politics, admits Brown has so far struggled to connect with voters. Asked whether Brown can communicate Labour's mission, he says: "Yes, I do think he can. I do think he will."

Asked why Brown has not done so, Darling falters as he says: "Er, well. Well, it's always difficult, you know ... But Gordon, in September, up to party conference, has got the opportunity to do that. And he will do that. It's absolutely imperative."

The interview was designed to show the chancellor in a more personal light after a year in which he shouldered much of the criticism over the collapse of Northern Rock and the loss of discs containing details of half the population.

He said nothing in his interview of his tensions with No 10 after he was reportedly rebuffed by Brown when he pointed out the dangers of abolishing the 10p tax rate soon after he took over as chancellor.