PM ‘united with Osborne’ over economy

By Alex Stevenson

David Cameron has insisted chancellor George Osborne has the backing of No 10, after more disappointing figures pile the pressure on the government.

GDP grew by just 0.2% in the three months to June 2011, down from 0.5% in the first quarter of the year.

That has renewed concerns about the coalition's deficit reduction agenda, which Labour claims is hindering rather than helping the stuttering recovery.

Mr Cameron's permanent secretary, Jeremy Heywood, had demanded a meeting with Mr Osborne's Treasury team over concerns that No 11 was not more committed to tackling the economy with "urgency", the Telegraph reported.

It quoted a Whitehall source as saying: "The Treasury has been almost entirely focused on reducing the deficit not promoting economic growth. Jeremy Heywood read them the Riot Act."

The prime minister took to the airwaves this lunchtime to play down speculation that broadly stagnant growth was opening up divisions at the heart of Whitehall.

"Unlike previous governments, there's one team at the heart of this government – that is the chancellor and the prime minister, working together to make sure we do everything possible to get our economy growing," Mr Cameron said.

"The chancellor's growth review has the 100% backing of the prime minister and No 10 Downing Street – absolutely working together to drive that through government.

"I don't think you have seen in recent years a prime minister and chancellor working as closely together as George Osborne and I do."

He described the 0.2% growth figure as "positive", echoing the approach taken by Mr Osborne earlier today.

The chancellor said: "The positive news is that the British economy is continuing to grow. It is creating jobs."

Shadow chancellor Ed Balls responded to his comments by claiming Mr Osborne was in "total denial".

He said: "Even Downing Street now realise that urgent action is needed to get our economy growing again, but the chancellor just thinks we should carry on regardless with no credible plan for growth.

"Instead of clutching at excuses like too much snow in winter and too much sun in the spring George Osborne needs to realise he only has himself to blame for the choices he made a year ago."