Britain is facing an economic downturn in 60 years and the effects could be long lasting, the Guardian newspaper yesterday cited Alistair Darling, chancellor of Exchequer as saying.

The economic times faced by Britain and the rest of the world "are arguably the worst they've been in 60 years," said the chancellor.

Darling's remarks came as the Bank of England warned that 2 million people could be unemployed by Christmas.

He admitted that he had no idea how serious the credit crunch would become, adding that the ruling Labor faces its toughest challenge in a generation.

"We've got our work cut out. This coming 12 months will be the most difficult 12 months the Labor party has had in a generation."

He also predicted there would be no leadership challenge against Prime Minister Gordon Brown, revealing that Brown has no plans to carry out an imminent cabinet reshuffle.

The Conservative Party has been well ahead of Labor in the opinion polls over the last year, leading to speculation that Brown will have a cabinet reshuffle when he comes back from summer holiday.

Analysts agree that the coming Labor Party Conference in late September will be vital for Brown to face the party members and come up with measures to reverse economic downturn in face of the global credit crunch.