It's official: boom and bust is back

GORDON BROWN may have bailed out the banks, but salvation for the economy is a long way off. This is just the start - and it's going to get worse.

It only takes a brief look at the housing market, the high street, factory output or the City to know where we are heading.

And today's dismal growth figures confirmed it: the Brown Boom has turned to the Brown Bust.

When the Bank of England Governor and the PM warned we were heading for recession, we knew it would be bad. But no one thought it would be this bad.

The final quarter will be no better and then we are officially in recession, as if official confirmation were needed.

The collapse of Lehman Brothers sparked the most dramatic upheaval of the financial system since the Wall Street Crash of 1929 and Great Depression of the Thirties. There has never been economic casualties like this: Merrill Lynch, AIG, Fannie Mae, Freddie Mac in the US; Royal Bank of Scotland, Halifax Bank of Scotland, Bradford & Bingley and of course Northern Rock in Britain.

But this is no longer a banking story. This is a story about the whole economy. Ask a property dealer in London how the market has been since Lehman fell, and the answer is "what market?" Bank lending has stopped, the housing market is paralysed, and retail spending is sharply down. In the City, where there was panic and fear over the banking crisis two weeks ago, there is now sober recognition of the wider problem of recession.

The FTSE 100 is trading at five-year lows and the pound is tumbling against the dollar in its worst week since Black Wednesday in 1992. City traders say they've been burned too many times. For many this is the final straw. Wait till Christmas say some, leave it till March say others. Boom and bust is back.