Prime Minister David Cameron has insisted that the Government will "finish the job" of getting Britain's debt under control, as he came under intense pressure for a change in course to revive growth.
Wednesday's woeful growth figures, which showed the UK economy sliding deeper into recession with a 0.7% fall in GDP between April and June, led to calls from within the Conservative Party for George Osborne to be replaced as Chancellor or stripped of his job as head of election strategy.
Liberal Democrat Business Secretary Vince Cable was forced to deny he was angling for Mr Osborne's job, after telling the BBC he would "probably" make a good Chancellor.
And Labour leader Ed Miliband called for a new approach, accusing the Prime Minister of complacency over "an economic plan that is failing".
But the Chancellor received a strong endorsement from the head of the Organisation for Economic Co-operation and Development, Angel Gurria, who urged him to "persevere" with his deficit-reduction strategy and "stay the course".
Mr Gurria said that Mr Osborne was "sowing the seeds of what will be the elements for recovery" and warned that any weakening of resolve would be punished by the ratings agencies and the markets.
The 0.7% contraction in GDP means Britain has had negative growth for three consecutive quarters, leaving it mired in the longest double-dip recession since quarterly records began in 1955, and possibly since the Second World War.
Mr Cameron acknowledged the figures were "very disappointing" but he insisted he would not abandon his economic policy, telling an investment conference at London's Lancaster House: "We've taken bold decisions to sort out our public finances and earn credibility with the markets.
"As a result, in just two years we have already cut the deficit by over a quarter. Our interest rates are less than 2%. And my message today is clear and unequivocal. Be in no doubt: we will go on and finish the job."
Mr Miliband responded: "These figures were not just disappointing, they were a disaster. The Prime Minister seems complacent. He promised change, he promised things would get better but it hasn't happened. What I want to say to British businesses and British families is that there is another way forward, there is another way to get people back to work."
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