Chancellor insists coalition remains united

Mr Osborne said the Tory/Lib Dem partnership had succeeded in delivering economic stability at home and confidence abroad, and would continue to do so for the next four years. Its success could be seen in the interest rates paid by British companies and consumers, which were lower than most European neighbours despite the size of the UK’s debts.

“We have the interest rates of Germany despite having a bigger budget deficit than Greece or Portugal,” said the Chancellor. “That is our achievement.”

In a speech to the Institute of Directors in east London, Mr Osborne said: “Let me make this clear on the first anniversary of this coalition. We in this Government – Conservatives and Liberal Democrats – are as united in our mission to reduce Britain’s deficit as we have ever been.”

Mr Osborne was speaking after Lib Dem leader Nick Clegg promised a more “muscular liberalism” in the party’s approach to the coalition in the months and years to come.

“In the next phase of the coalition, both partners will be able to be clearer in their identities, but equally clear about the need to support Government and government policy.

“We will stand together, but not so closely that we stand in each other’s shadow.

“You will see a strong liberal identity in a strong coalition Government. You might even call it muscular liberalism.”

Mr Clegg, speaking at the National Liberal Club in London, insisted the Lib Dems were still a distinct party with different values from both the Conservatives and Labour and claimed, despite last week’s electoral setbacks, his party remained in a strong position to win millions of votes in the 2015 General Election.

But as the coalition entered its second year a poll showed almost half (49 per cent) of voters said it has been bad for Britain and more than half (53 per cent) rated the Government’s record so far as disappointing.

The Deputy Prime Minister took the brunt of voters’ anger, with 63 per cent of those questioned by ComRes for ITV News saying they did not trust him, and more than half (59 per cent) agreeing he had overseen a sell-out of Lib Dem principles.

Only 24 per cent called him a good leader for his party.