DAVID Cameron last night came out fighting for Chancellor George Osborne, insisting he was doing an "excellent job" and would remain in his post at the 2015 General Election.

His staunch backing came as the National Institute of Economic and Social Research today publishes one of the gloomiest predictions about the UK economy to date, saying GDP will shrink by 0.5% this year.

Following the so-called "omnishambles" Budget and Britain plunging into a double-dip recession, Mr Osborne's reputation has taken a hit. In a poll of Tory activists last week, he received just 2% support.

The Chancellor's rating sparked speculation he could be replaced in the Prime Minister's autumn reshuffle even though Westminster insiders ruled it out because it would be an acknowledgment by Mr Cameron he had got his economic policy badly wrong.

The Prime Minister declared: "George Osborne is doing an excellent job in very difficult circumstances and he has my full support in going on and doing that job."

Asked if he would still be the Chancellor at the next election, Mr Cameron replied: "He's not going anywhere – yes."