Coalition tries to play down Vince Cable's warning of triple-dip recession

The coalition has attempted to play down a warning by the business secretary, Vince Cable, that Britain faces the risk of a triple-dip recession.

In an interview with the Observer on Sunday, Cable said the UK falling into recession for the third time since 2008 was "certainly" and "clearly" a risk – although he said the "most likely" scenario was that the economy would continue "bumping along the bottom" broadly as the Office for Budget Responsibility has forecast.

Officials in both parties played down the significance of Cable's comments. But the Treasury came close to slapping down the Liberal Democrat business secretary, saying bluntly: "It's quite right for the independent OBR to make economic forecasts."

Danny Alexander, the Liberal Democrat number two at the Treasury, also appeared to back the OBR forecast, but suggested that his colleague should not be dismissed outright.

The forecast "would suggest that we're not going to have that [a triple dip] happening," Alexander told the BBC's Andrew Marr Show. "But of course, look, it's an uncertain world out there, we're seeing continuing problems in the eurozone. But I'm happy to rest on the OBR's forecast …"

Mark Littlewood, the director general of the Institute of Economic Affairs, said that if Cable was making a technical argument about one or two quarters of negative growth the difference between a slight dip and the low growth forecast was "so tiny as to mean virtually nothing".

However, if Cable was signalling a concern about the OBR's record of over-optimistic growth forecasts, that was more troubling, he said. "The OBR now says that the UK economy will grow by 11.5% from 2013 to 2018. However, if they are as over-optimistic about this time period as they were about this year, the economy will actually shrink by 4% between 2013 and 2018."

Littlewood said: "If Vince is of the view that the OBR numbers are seriously over-egged, the coalition faces a huge headache. Tax revenues will be much lower and welfare bills much higher than they are banking on. The deficit reduction plan is already teetering. It wouldn't take much for the deficit to start growing again."

Alexander continued the theme of long-running austerity from last week's autumn statement, warning that "squeezes" on government spending could continue into the next two parliaments – beyond 2020.Cable also warned that when growth did return, interest rates would have to rise, causing problems for millions of mortgage holders "hanging by a thread … Even the recovery is going to be very painful".

Cable lent his support to calls for the Bank of England to be given a target to boost growth, alongside that of controlling inflation.