Gordon Brown described the global economic downturn as a depression for the first time yesterday during a furious Commons clash with David Cameron.

The Prime Minister’s remark came as he told MPs that countries “should agree as a world on a monetary and fiscal stimulus that will take the world out of depression”.

His use of the D word was not picked up at the time by Mr Cameron, who was using a series of questions to embarrass Mr Brown over his “British jobs for British workers” slogan that has been used by strikers in the foreign labour dispute.

Downing Street officials later moved swiftly to say that he had not intended to refer to the word depression but had slipped up. They suggested that he meant “recession”.

Mr Brown has been careful in his use of language when describing the state of the world economy, previously talking of a global financial crisis, then – after vigorous debate among ministers – a recession, and last week a deep recession.

George Osborne, the Shadow Chancellor, called on Mr Brown to explain whether his use of the word had been deliberate. “The Prime Minister must personally and urgently clarify whether his statement today that the world is in ‘depression’ was a slip of the tongue, or whether he knows something that we don’t know,” he said. “For the sake of confidence he should clear up this confusion. Prime Ministers in particular need to be very careful about their use of language to ensure they don’t undermine confidence.”

Downing Street said that Mr Brown did not believe the world was in a depression, despite his use of the word. Even so ministers, including Lord Mandelson, have spoken of the danger of the recession becoming a depression unless the right action is taken. “It was not his intention going into PMQs to describe the current global situation by using that word,” the Prime Minister’s spokesman said.

Mr Brown’s slip was ironic given a poll last night that suggested a majority of people – 58 per cent – believe he is refusing to acknowledge the full depth of the economic crisis.

The bleak remark over the peril facing Britain was all the more ironic as a glimmer of hope emerged for the embattled economy.

A key gauge of conditions in the services industries, spanning everything from leisure centres to legal firms, and accounting for the majority share of the economy, showed a second monthly improvement last month. The pickup in the index of services activity from purchasing managers at businesses nationwide led to speculation in the City that the 1.5 per cent slump in GDP in the past quarter might signal that the low point of the recession had been reached.

While analysts believe that there will be several more quarters of decline, some felt that these might be less brutal. Tellingly, the measure of businesses’ confidence rose in December.

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