Children's Secretary Ed Balls said the current crisis was "the most serious global recession for over 100 years", and its effects would be felt for a decade and a half.

The comments - the gloomiest yet from a senior member of the Government - came in a speech to activists in Yorkshire at the weekend.

"The economy is going to define our politics in this region and in Britain in the next five years, the next 10 years and even the next 15 years," Mr Balls said.

"These are seismic events that are going to change the political landscape. I think this is a financial crisis more extreme and more serious than that of the 1930s and we all remember how the politics of that era were shaped by the economy."

The Normanton MP - regarded as Gordon Brown's closest ally - continued: "We are now seeing the realities of globalisation, though at a speed, paces and ferocity which none of us have seen before. The reality is that this is becoming the most serious global recession for, I'm sure, over 100 years as it will turn out."

Shadow Chancellor George Osborne said the remarks, reported in the Yorkshire Post, contradicted Treasury forecasts that the economy will be back on track by the second half of this year. "This is a very worrying admission from a Cabinet Minister," he said. "We are being told not only that we are facing the worst recession in 100 years, but that it will last for over a decade, far longer than Treasury forecasts predict."

A spokesman for Mr Balls insisted that the Prime Minister and Chancellor Alistair Darling had highlighted the "unprecedented speed and ferocity" of the crisis "time and time again".

"The unprecedented global nature of this crisis and its impact on the global financial sector is affecting every single economy in the world," the spokesman said.

"The Bank of England agrees with this analysis. As the Deputy Governor of the Bank of England Charlie Bean said in October, 'This is a once in a lifetime crisis, and possibly the largest financial crisis of its kind in human history'."