Alistair Darling's shocking admission: British economy is at a 60-year low - and it's only going to get worse

The Chancellor said the country was on the brink of 'arguably the worst' financial conditions for 60 years.

His grave diagnosis comes in the same week as a warning from a Bank of England policymaker that two million people could be unemployed by Christmas. It will cause significant damage to Gordon Brown's hopes of staging a political fightback with a series of measures designed to help families meet soaring mortgage, food and fuel costs.

The remarks are also likely to add to the unease within the Cabinet that the Prime Minister has been doomed by the downturn and will find it impossible to regain support in the country.

Mr Darling admits he had no idea how serious the credit crunch would become.

'I think it's going to be more profound and long-lasting than people thought,'