Today the government's Comprehensive Spending Review will be announced - we'll find out exactly how the pain will be distributed. The Bank has prepared the terrain by hinting at an expansion of quantitative easing to try and compensate for the blow to demand implicit in the spending cuts.
Mervyn King yesterday suggested that the coming decade would be a 'sober' one. The hint is that we have overdone it and need to dry out. The funny thing is, just as the party that ended in the gutter was getting going, Mervyn was talking about a 'Goldilocks' economy, and developing his 'Maradona theory ' of monetary management. I have no particular animosity towards King, but I am left wondering why, given his past record, we should believe his prediction that we are heading for sobriety, rather than despair.