Lord Mandelson has raised the prospect of an age of austerity in Britain under Labour, with spending cuts and efficiency savings running right the way through to 2020.

In the gloomiest assessment to date by a UK Government minister, the Business Secretary said there would be "constraints for the next decade", sharply contrasting the next 10 years with the previous 10 years of growth and high spending.

The language and tone appeared to be another significant shift in nuancing the government's underlying message.

The Conservatives accused the Cabinet of being split down the middle on spending cuts.

Earlier this month, Whitehall sources suggested some Cabinet ministers felt Gordon Brown's black-and-white "Labour spending versus Tory cuts" strategy was too simplistic and needed to be "refined" with more talk of "targeted investment" and "efficiency savings".

Coincidentally, Lord Mandelson's remarks yesterday over lunch with Westminster journalists came hours after a poll showed the public was keener on the Tory message of the need for spending cuts rather than on the Labour one of spending increases to fight through the recession.

The Secretary of State said: "The fall in the economy is coming to an end but the severity obviously is not yet behind us. But for all the fragile signs of economic recovery, we have not yet pulled out of the recession."

He emphasised how the economic imperative was the same in the short and long term - to achieve economic growth to create jobs - and he explained it was important for the nation not to lose its nerve in the face of necessary high borrowing to deal with the costs of recession."

Lord Mandelson then said: "Of course, there will be pressures on spending after 2011 and constraints for the next decade. This depends above all on our success in preventing short-term unemployment turning into long-term joblessness and our investments in those sources of future employment continuing."