No 10 tries to limit damage over Balls' bleak vision for UK

With a new opinion poll giving the Conservatives a huge lead, Downing Street scrambled to limit the damage from Mr Balls's claim that the impact of the financial crisis could last another 15 years.

Shadow chancellor George Osborne stepped up the attack as his party pounced on Mr Balls's admission that the banking crisis had erupted in part because the UK's financial regulation "wasn't tough enough" in recent years.Mr Balls, who was Gordon Brown's chief economic adviser when he was Chancellor, triggered the row with a speech to Labour party activists warning of the lasting impact of the recession.

He said: "People are quite right to say that financial regulation wasn't tough enough in Britain and around the world, that regulators misunderstood and did not see the nature of the risks and dangers being run in our financial institutions." He also raised fears that the downturn could spark a Thirties-style resurgence of the far-Right.

Mr Balls veered off the draft version of his speech to deliver easily the gloomiest assessment yet from a senior member of the Government. He said: "The reality is that this is becoming the most serious global recession for, I'm sure, over 100 years as it will turn out.

"The economy is going to define our politics in this region and in Britain in the next five years, the next 10 years and even the next 15 years."

A Downing Street spokesman moved to play down his remarks, claiming the Schools Secretary was describing the financial sector rather than the "real economy". The spokesman added: "He is not suggesting the impact on the real economy here or elsewhere will be worse than the Thirties."

But Mr Osborne said: "This is a very worrying admission from a Cabinet Minister. We are being told not only that we are facing the worst recession in 100 years, but that it will last for over a decade, far longer than Treasury forecasts predict."

Lib-Dem Treasury spokesman Vince Cable contrasted Mr Balls's dire assessment with more positive comments from fellow minister Baroness Vadera, who recently said she could see "green shoots" of economic recovery.

Mr Cable said: "Instead of giving clear and consistent leadership, Government ministers are oscillating between complacent optimism and this doom-laden picture of Armageddon. Surely the truth lies between the two?"

The Government's troubles over the recession will be underlined tomorrow when unemployment is set to hit two million.

Conservative leader Mr Cameron today demanded skills training to be widened to cope. "Our economy is shrinking. And there isn't just a hardcore of people not in work, education or training - we're in an era of mass unemployment," he said in a speech.

"We must do all that we can to help those who have been laid off to get back into work as soon as possible."

A Times/Populus poll today showed the Tories had opened up a 14-point poll lead over Labour.