In 1964, poring over the Treasury’s briefing papers on his first day in 11 Downing Street, Jim Callaghan was interrupted by Reginald Maudling, his Tory predecessor.

Maudling, carrying a pile of suits over his arm, popped his head around the door and said: “Sorry to leave it in such a mess, old cock.” He meant the state of the office, but his apology could equally have applied to the economy.

As Gordon Brown looked through a pile of Treasury papers in his office at No 11 on Friday, there was no predecessor to apologise.

Uniquely among modern-day chancellors he is entering his third term, having already clocked up more than eight years in one of the toughest posts in government. The only inheritance he is faced with is his own.

But Brown, like Callaghan, faces a testing time. Kevin Hawkins, head of the British Retail Consortium, says a downturn in spending means that retailers face “the most difficult set of trading conditions in living memory”.

ABN Amro, the City investment bank, predicts that unemployment will rise by 500,000 over the next three years as a result of large-scale job losses in retailing, manufacturing and construction.

For Brown this could be another unique experience. His years as chancellor have been characterised by rising prosperity and falling unemployment; what happens if things start to turn sour? The Treasury insists that talk of an economic crisis is misplaced. Growth in the economy will top 3% this year, it says, as it did last year. Outside economists have wrongly predicted disaster before, they say.

However, those economists say that Brown’s luck has to run out sooner or later. “Optimists argue that the current slowdown will prove temporary,” said James Carrick, an ABN Amro economist. “We disagree and think the worst is yet to come.”

POLITICALLY Brown has never been stronger. Having been at Tony Blair’s side throughout the election campaign and acted as what reporters dubbed a human shield when the prime minister faced difficult questions on Iraq, he is widely seen as having saved Labour from the political abyss.

“Think what it would have been like if Gordon had carried on sulking,” said one analyst.

Suggestions being floated by Blairites even a few weeks ago that the prime minister, in a fit of post-election zeal, would shunt Brown to the Foreign Office or sack him from the cabinet altogether now look laughable.

If it came to a straight choice among Labour MPs between Blair and Brown, the chancellor would win hands down. When it comes to Brown’s eventual accession to the top job, no other candidate is on the radar screen.

Three of his closest advisers, Ed Balls, Ed Miliband and Ian Austin, were all elected as MPs on Thursday, adding to an already strong Commons base.

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