Byline: ANTHONY HILTON
FOR Brits as a whole wanting to know why this year they can only afford to holiday in Blackpool not Benidorm, Salcombe not Sardinia, the answer is we have too many bankers and not enough oil. This is a challenge for the whole world but the problem is more acute here than anywhere else.
This means our economic downturn is likely to be bigger, too.
It is an astonishing transformation from 12 months previously: for it is a year ago this week that the credit crunch broke on an unsuspecting world. Remember those balmy days? Gordon Brown had just moved into the Prime Minister's job and was hugely popular. Houses were soaring in price but still being snapped up because lenders would cheerfully grant 100 per cent mortgages to multiples of five times income. Waves of immigrants were coming to work here.
The City drove the feel-good frenzy further with one mega deal after another the bid for Sainsbury by the Qataris, which failed to come off, and the takeover of Dutch Bank ABN Amro by Royal Bank of Scotland, which did.
What a difference a year makes.
House prices, the economy, the availability of mortgages, and Gordon Brown's ratings have all plummeted and with them retail sales, house building and consumer and business confidence.
Even the Poles are going home.
We now have to grapple with a damaging side effect of 15 years' uninterrupted growth: few people under the age of 40 can remember what to do when the economy slows. That is as true in Whitehall as in the rest of the economy.
In the Treasury it's more trembling hands than stiff upper lip. Hence the flocks of headless chickens where leadership and government are supposed to be.
Twelve months ago only a few of us predicted that the crisis would last this long. Now that it has, even fewer see any sign of it ending soon. What is apparent, however, in a way which was not obvious back then, is that we have two separate challenges and their combination makes the restoration of stability much harder to achieve.
The first is that now Asia is booming, there are not enough natural resources in the world to feed its appetite for economic growth. Supplies of basic commodities the obvious ones such as copper and oil, and the less obvious but no less vital ones like phosphorus and food are in such short supply that the prices have soared. Paying for these means we have significantly less to spend on the good things in life.
Short-term relief might come if China's growth slows so they buy a bit less. But in the longer term, with another two billion people coming into the world and Asia aspiring to western standards of living, prices can only go up. We will have to get used to much higher prices and spending much less on luxuries.
The second problem and this is one which hits us hard is that too much of the activity of the financial sector in recent years has had no underlying economic purpose other than to earn fees for bankers. …