Lord Mandelson claimed to have detected the “green seedlings” of economic recovery on Wednesday as he attacked the Tories’ downbeat warnings on the need for spending controls in a time of austerity.

The business secretary was careful not to repeat the mistake of Lady Vadera, the business minister, who was accused of being over-optimistic after identifying “a few green shoots” of upturn earlier this year. But Lord Mandelson said there were grounds for believing that the worst of the credit crunch might be easing.