Alistair Darling took to the airwaves to clarify his comments in a newspaper interview, saying that he was referring to global economic conditions rather than those in Britain.
However, his assertion that the "fundamentals" of the British economy remained "strong" did little to quell claims of chaos at the top levels of Gordon Brown's Government ahead of a long-planned "rescue package" for hard-pressed families. New measures on housing and fuel bills are expected within days. A Cabinet Minister admitted, however, that the Government had no single "silver bullet" to deal with the credit crunch. This weekend, with final details still being worked out, ministers appeared to be moving away from more radical measures such as suspending stamp duty on home sales and imposing a windfall tax on energy companies. Opposition politicians seized on the Chancellor's comments after he told The Guardian that the economic downturn, which has seen growth drop to zero and house prices fall by 10.5 per cent, was "arguably the worst ? for 60 years". In a series of unusually frank remarks, Mr Darling also admitted voters were "piss off" with Labour, and poured scorn on claims that Mr Brown, who is facing a possible challenge to his leadership, would reshuffle his Cabinet in the next few weeks. He also alleged that there were "lots of people" who wanted to do his job, leading to claims of damaging splits. However, a key aide to the Chancellor said that the remarks should "in no way be seen as an attack on Gordon – they absolutely were not intended to be so. "Alistair is one of Gordon's closest political allies and that is not his style". Mr Darling did a range of television interviews to play down the apocalyptic-sounding warnings in his earlier comments, which were at odds with a rosier picture painted by the Prime Minister. "I explained that what is happening to every country in the world, ours included, is that we have a credit crunch the like of which we have not seen for generations," the Chancellor said. "We have that at the same time as oil and food prices going up. But I am also clear that the fundamentals of our economy are strong." The comments come ahead of the first of a series of measures to help those worst hit by the credit crunch. They will be announced in stages over the next few weeks, leading up to Labour's annual conference in Manchester at the end of next month. But ministers were at pains to play down the possibility of a single big-picture package, leading to the belief they would not bring in either a windfall tax on energy firms or a suspension of stamp duty. "There is no silver bullet," a Cabinet minister said. In an announcement expected on Tuesday, ministers are likely to say they will channel more funds to local authorities to finance moves aimed at helping people get on the property ladder, including councils buying repossessed and unsold properties and offering struggling borrowers help in return for a stake in their homes. Towards the end of the week, ministers are expected to unveil details of an agreement with energy companies to provide more help for lower-income households facing bills that have risen by up to 40 per cent. In another part of the "rescue package", from tomorrow, the wage packets of 22 million workers who pay tax at the new 20p rate will be increased by a one-off £60 a head in September, followed by an extra £10 every month until the end of March. The rebate, totalling £2.6 billion over seven months, was ordered by the Government in May after it was threatened with a back-bench revolt over the abolition of the 10p tax band. 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."