George Osborne was facing renewed demands from the Tory rank-and-file for tax and spending cuts tonight after Britain was stripped of its prized AAA credit rating.
Ministers and senior party figures rallied round the chancellor in the wake of the decision by agency Moody's, predicting it will have little impact on the Government's borrowing costs.
But Conservative backbenchers warned that next month's Budget was the "last chance saloon", demanding cuts to corporation tax and capital gains to revive the UK economy.
Meanwhile, Labour reiterated its calls for borrowing to be increased in the short term to fund a fiscal stimulus.
Explaining its move on Friday, Moody's pointed to "subdued" growth prospects in the UK and a "high and rising debt burden".
It now expects the "period of sluggish growth" to "extend into the second half of the decade".
Speaking on the BBC's Andrew Marr Show this morning, Business Secretary Vince Cable dismissed the downgrade as "largely symbolic".
"In terms of the real economy there is no reason why the downgrade should have any impact," the Liberal Democrat said.
"If you remember last year the US was downgraded, the economy grew strongly relative to Europe... and France had a downgrade last year, its interest rates that it borrows long term in the markets are only a little above ours.
"These things do not necessarily affect the real economy but they reflect the fact that we are going through a very difficult time and we are trying to balance the need to get the deficit and the budget under control with the need to get back to economic growth."
He went on: "The rating agencies have a pretty bad record. They are a bit like tipsters. They get some things right and a lot of things not right.
"They are part of the background noise we have to take into account."
Cable also flatly ruled out deeper spending cuts, suggesting that kind of policy was coming from "right-wing ideologues".
"I think to embark on a slash and burn policy in response to this would be utterly foolish and counterproductive, and I am sure we will not be going there," he said.
On the question of whether the Government could afford to spend more, the Cabinet minister said: "I thought it depends what the spending is for. We have to reduce government current spending, that is what we are trying to do...
"But there is a lot of government spending that is investment in the future, investment in skills and science and infrastructure, and we have got to continue doing that."
Cable said the argument about whether the coalition should shift from plan A to plan B was "a bit juvenile".
"What we are actually talking about is plan A+, or plan A++. Of course you have got to have the budget discipline but you have also got to have the Government acting in a way that supports growth," he added.
Tory former chancellor Ken Clarke warned it would take years to regain the top credit rating and return to "sensible economic growth".
But he said the coalition should "stick to" its policy, adding: "I think the way in which we will recover confidence is making clear we're a strong firm Government, that the strategy we're on is the one that is eventually going to get things better and that the alternatives frankly are a bit odd."
However, Conservative backbencher Adam Afriyie - touted by some as a future party leader - said public spending cuts so far had not been very deep.
He proposed raising the tax threshold, abolishing national employers' national insurance contributions, and lowering corporation tax and capital gains.
"The coalition is about to enter the last chance saloon," he wrote in the Mail on Sunday.
"Without growth, the Government will not secure a Conservative majority in 2015. For all the cuts and austerity, core government spending has been reduced by only 3% since May 2010 and the national debt will actually increase by 58% over the course of the Parliament.
"This Budget is a final opportunity to deliver real growth before 2015. Grandiose infrastructure projects have their place but they do not deliver immediate economic benefits. What we need are bold, simple, serious measures to secure growth right now."
Former minister John Redwood told the Sunday Times: "The markets have been saying for some time that the Government is borrowing too much and the strategy isn't working as required."
Tory ex-chancellor Lord Lamont said the agencies believed that the fiscal consolidation was too slow.
"The message that this sends out is that the fiscal consolidation is in the opinion of some people taking longer than expected," he told BBC Radio 4's World This Weekend.
"But it is wrong to draw the lesson from that as being you ought to expand borrowing and moderate it even further.
"If anything they are saying, 'you are going too slowly'...
"We have always been on a plan B, in a sense, rather than a plan A but I don't think, as I say, one should draw the conclusion that we should go more slowly."
Another former Conservative chancellor, Lord Lawson, insisted the "basic thrust" of the Government's policy was right.
But he also raised concerns that the pound could be punished.
"I hope there won't be a run on sterling," the peer told Sky News' Murnaghan. "I think it would be a very great mistake if anyone in the Government or Bank of England gave the impression we would like to see a further depreciation of sterling. That would not be clever, that would not be sensible, that would not be helpful."
Labour deputy leader Harriet Harman told the BBC: "The reason why the deficit hasn't been going down is because the economy hasn't been growing and the way you get growth is a One Nation approach where you invest in people, in industry, in infrastructure to help the economy grow.
"I think really, how many more signs does he need before he realises that their economic plan has failed and has made things worse and they need to change course?"
Former Labour chancellor Alistair Darling said he had been "extremely doubtful" of the Government's strategy ever since 2010.
He told Sky News' Murnaghan programme: "I think that when they were elected they very unwisely staked their reputation on maintaining the AAA credit rating that they had, they compared us to Greece, they said they could eradicate the structural deficit by 2015.
"These were wildly optimistic claims and they were perhaps made because of inexperience and maybe a touch of recklessness.
"But the result is that they have sustained quite substantial political damage, but more importantly for the country the economic harm of yet another another blow to confidence. I think that is very, very important, they have been following the wrong economic strategy, but they are paying a very, very heavy price for it."
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