We won’t do a comprehensive analysis of the pre-Budget report here: there will be plenty of analysis elsewhere on FT.com. But just three observations.

1] The central assumption for RPI next year is -2.25 per cent: ie deflation. That doesn’t necessarily mean that CPI - which excludes house price inflation - will go negative.

2] Darling seemed to admit for the first time that the UK could be worse hit than other countries by the impact of the credit crunch: “Because of the size of our financial sector we are likely to be affected more directly by a global financial recession.”

3] The chancellor is optimistic that “we expect the recovery to be underway” by the end of next year, when the lower VAT regime ends. This seems unrealistic.

November 24, 2008 7:04pm in Alistair Darling, Budget, Credit Crunch, Economy, Gordon Brown, UK politics | Comment