Petrol Panic, Granny Tax, and Donor-gate: Seven Days That Shook David Cameron's Government

Prime Minister David Cameron's has staggered through his most difficult week since coming to power in May 2010 - and may yet be toppled by a simmering fuel protest that nearly unseated Tony Blair's Labour Party nearly twelve years ago.

The Conservative-led coalition government has struggled to manage a series of negative headlines in the past seven days, beginning with what seemed to be a pedestrian budget presentation to the House of Commons last Wednesday.

Day One: The "Granny Tax"

Chancellor George Osborne had less than 24 hours to bask in the approval of his coalition supporters following his fourth Budget statement to the House. Headlines in the morning papers lashed out at his plans to reduce benefit payments to pensioners as part of his overall plan to cut the top rate of income tax and lift the tax-free threshold for the nation's poorest. "Granny Tax" shrieked the redtops as they sifted through the details of the £3.25bn plan. "Gran Theft Auto" the London freesheet Metro said. "Osborne Picks the Pockets of Pensioners" said the Daily Mail.

Day Two: The Polls

Pollsters were quick to suggest the move to tax the over-60s, who consistently turn up at the polling stations, would lead to a spike in Labour support. Few would have guessed, however, the extent of the bounce. Survation, in a poll published in the Daily Mail, said Labour leader Ed Miliband enjoyed a commanding eight point lead over Cameron's coalition in the immediate aftermath of the budget, with a resounding two-thirds giving the thumbs down to the Granny Tax.

Day Three: The Resignation

An old-fashioned Sunday Times sting caught Tory treasurer Peter Cruddas boasting about the level of access to the Prime Minister that could be provided based on the size of a donation to the party. The founder of city firm CMC Capital Markets thought he was speaking to a group of fund managers from Liechtenstein. He wasn't, and his resignation hit the desk of David Cameron before the end of the day.

Day Four: The Dinner Guests

Monday's papers were alive with speculation after the Cruddas resignation and the prime minister's vow to reform his party's rules on donations and solicitations. Who else had been granted a favoured audience with the PM? After first refusing to say, No 10 U-turned and published a list of Cameron's private dinner guests, which included some of the biggest names in the City of London's financial community and re-enforced the Tories "rich man's party" image.

Day Five: The Economy

Still clinging to the party's unpopular "No Plan B" strategy of spending cuts and debt reduction, Cameron and Osborne could at least take comfort in the fact that polls still suggest the pair were more trusted on the economy than Miliband and Shadow Chancellor Ed Balls. Step forward theuncooperative Office for National Statistics, which ran a slide rule over the nation's accounts for the final three months of last year and decided the economy slowed even faster, at a rate of 0.3%, than it had first anticipated. And while that figure may be difficult to cram on to a broadsheet headline, hacks had very little difficulty in using the ONS data on personal incomes: the 1.2% drop in our take-home pay was the biggest plunge since 1977.

By Thursday, the Paris-based OECD was also weighing in, suggesting Britain would slump back into recession as early as the first quarter of this year - and would be the slowest of the G-7 group of nations to recover when it finally began to expand.

Day Six: The House Prices

Sod's law would certainly seem to hold a special place in the hearts of Tory party advisers after hearing that the benchmark Nationwide Building Society's index of house prices showed a full 1% fall across Britain this month - the biggest drop in more than two years. Nationwide's reason? The end of the Stamp Duty tax holiday for first time buyers that Osborne said only last week was no longer necessary. The Bank of England's mortgage lending numbers offered no respite: new home loans are at an 8-month low and major high street banks simply aren't living up to the government's "Project Merlin" agreement to extend more credit into the economy in exchange for the billions in taxpayers' cash they've received.

A week of bad news has tested the Government's ability to lead the nation.

Day Seven: The Petrol Panic

Easily the most potentially damaging of the weeks' event, as evidenced by Tory Cabinet Minister Francis Maude's innocuous suggestion that Britons fill up a jerry can with fuel in advance of any industrial action by tanker drivers - who are responsible for moving around 90% of the fuel that reaches petrol station forecourts. The well-meaning, if naïve, suggestion appears to have led to a series of "panic buys" around the country, with the even the chief of police in Dorset calling for stations in his coastal southern England county to be temporarily closed as a result.

The images now splashed across Sky News and the BBC call to mind the worst of the fuel protests in September 2000, when the so-called "Farmers for Action" blockaded refineries and depots up and down the country, effectively shutting down more than 97% of deliveries. The four-day protest led to a near collapse of Tony Blair's government and reportedly cost the British economy over a £1bn in lost output.

It's hard not to consider that at the time, UK GDP was growing at 3.9%, oil was trading at $27 a barrel and Blair was sitting on 179-seat majority after his crushing defeat of John Major in 1997.

Compare that to the paltry 0.7% economic flatline of today, oil prices well over $100 a barrel and the the sticky-back plastic-firm coalition agreement with the (now oddly silent) Liberal Democrats.

The Tories' choices are stark: face down the fuel tanker drivers and risk economic paralysis in an already sclerotic economy ... or give in an embolden the myriad trade unions threatening action in what was meant to be a golden summer of Queen's Jubilee and Olympic celebrations.

Sadly for Cameron, either option could easily lead to a "Summer of Discontent".

And an early autumn election.