A majority of people now believe that the government's economic policies are hurting rather than healing the British economy, a new poll reveals, as cabinet divisions over how best to stimulate a return to growth threaten to destabilise the coalition.
With 10 days until George Osborne delivers his crucial fourth budget, an Opinium/Observer poll shows almost three times as many voters (58%) believe the austerity drive is harming the economy as those who think it is the correct medicine to restore it to health (20%).
The findings, which follow a stinging rebuke to David Cameron on Friday by the government's own financial watchdog, will add to pressure on Osborne to change course as the UK hovers on the brink of a triple-dip recession.
The independent Office for Budget Responsibility rebutted claims by the prime minister that the government's deficit-cutting strategy was not responsible for choking off growth, stating that austerity had knocked 1.4% off GDP in the past two years.
In the first two years of the coalition, most polls showed solid support for the government's hard line on the spending cuts, though the Tory lead over Labour on economic competence has narrowed in recent weeks.
The stark poll findings come as home secretary Theresa May appeared to make a subtle pitch for the leadership of the Tory party, arguing in a speech to a ConservativeHome conference that the Tories must govern for the whole country, not just sectional interests. May said: "We're at our strongest when anyone and everyone can feel that the Conservative party is for them." The speech, resembling a leader's party conference delivery in its scope and tone, was seen as an attempt to raise her profile at a time when many Tories are losing faith in Cameron's ability to remain as leader beyond the next election.
In a further worrying development for the coalition – and for Labour – the poll shows Nigel Farage's Ukip at 17%, more than double the Lib Dems' rating, as the populist anti-EU party siphons off support from both the Tories, who are down 2% on 27% compared with a fortnight ago, and Labour, down 2% on 39%.
Even among Tory voters, only 55% thought the government's economic policies were benefiting the country. Among Lib Dem backers, just 24% thought they were helping to restore the economy.
Tensions over economic policy surfaced at the Liberal Democrat conference in Brighton, where business secretary Vince Cable – who has called for more borrowing to fund housing and other infrastructure – warned against allowing the Tories to carry on waging an "ideological jihad against public spending and public services".
Former Liberal Democrat minister Paul Burstow joined those voicing serious doubts, saying it was crucial that the rate of deficit reduction did not inflict "great damage" on the British economy's potential to bounce back to growth.
"The government has been very focused on deficit reduction quite rightly, but that shouldn't be at the expense of doing everything possible to encourage growth," he said. "There is a growing concern that quantitative easing is not putting real money into the economy and we need to look at what we can do differently to put money into the economy."
Former leader Paddy Ashdown, who is heading the party's election strategy, said he disagreed with Cable's call for more borrowing, arguing there was no reason to believe it would be a panacea for Britain's economic problems. While Ashdown said he wanted the party to make a habit of being in government, he acknowledged that it was a constant battle "with Tory heartlessness to fight, and tough decisions to take in government".
The conference was mired in controversy as a motion calling for an emergency debate on economic strategy was rejected.
Deputy prime minister Nick Clegg, grilled about the lack of growth during a stormy question-and-answer session, called for discipline from Liberal Democrats and stressed there was no "magic wand" that would pull the economy round in a hurry.
Asked by former Lib Dem London mayoral candidate Brian Paddick whether there would be more growth if the Tories were not leading the government, Clegg said there was no easy way to economic success.
This week Labour will step up pressure over the economy by calling for an urgent review of the Bank of England's Funding for Lending scheme, after figures showed net lending had fallen despite the scheme having been in operation for six months. Lending to businesses is down more than overall lending, which Labour believes is a factor in holding back recovery.
Meanwhile, a poll conducted in marginal seats by the Tory former deputy chairman Lord Ashcroft, based on interviews with more than 19,000 voters in 213 constituencies, showed the Conservatives were on course to lose 93 seats to Labour if an election were held today.
This is lower than the national swing suggested by headline voting intention polls, partly because Labour is finding it hard to break through in Conservative seats in London and parts of the south.
It suggested that Labour would win 93 of the 109 most marginal Conservative seats in which it is in second place. The swing to Labour would be biggest in the Thames Estuary, the Midlands and some northern seats, but lower in southern towns and suburbs of London.
Emphasising that the poll represented a snapshot not a prediction, Ashcroft said: "I don't want to see a Labour majority of four, let alone 84. But I hope this puts the challenge into some sort of perspective. We have a long way to go to hold on to the seats we gained last time, let alone pick up many more. But things are slightly less grim than the headline polls suggest and we have everything to play for."
A Tory source said the party did not believe the Ashcroft polling accurately represented the state of the parties.
"Private and public polling repeatedly shows when faced with a straight choice between [Ed] Miliband and Cameron the public choose Cameron," he said. "Historically opposition parties who go on to win are at this stage in the parliament more than 20 points in front. Labour are nowhere near that.
"One year ago today we were marginally ahead in the polls. A lot can happen in a year. We need to go out there and demonstrate our strengths to electors. We are already outlining things on our side – a reduction of deficit, more private sector jobs and more people in employment."
Toby Helm and Daniel Boffey, The Observer
