I’ve just been talking to the prime minister in the cabinet room about the latest grim news on house prices and the state of the British economy (which you can watch here).
Gordon Brown is refusing to look or sound gloomy. After the huge rises in house prices in recent years he says that a 2.5% fall is not – in itself – a problem. The key, he insists, is whether it and the other problems caused by the global credit crunch can be contained. He is careful not to predict that Britain will weather the storm but rejects suggestions that he is “in denial” about the state of the British economy.
I also asked him about:
• the Olympic torch fiasco – it was worse in Paris he says and denies that he’s pulling his punches on human rights because Britain needs Chinese money.
• Zimbabwe - he calls once again for the election results to be published.
• the Diana inquest - he declares that it is time to draw a line and says that the time of the intelligence services should not be wasted by looking at these allegations of conspiracy again.
There was always going to come a moment when all the talk about the credit crunch, the liquidity crisis and our old friend Northern Rock suddenly hit home for people who don't spend their lives studying the financial pages. Today is, I suspect, that moment.
The Halifax's announcement that house prices suffered their biggest fall since the housing crash of the early 1990s will force many people to stop, pause and gulp. The optimists will say that things now are nothing like they were then. Inflation is not out of control. Interest rates are being cut, not raised. The economy is still growing. As Labour's canny former deputy chief whip, George Mudie, remarked in the Observer this week, "Well, fine, but that is history". He went on to quote Lloyd George 'You can't feed the hungry on statistics of national prosperity'.
Things, to coin a phrase, can only get worse - at least in the short run. These stats came before the lenders began to refuse mortgages to people they'd previously begged to take them. The FT has reported that as many as one in three housing deals are falling through because buyers cannot get the mortgage they need.
The question is what, if anything, can the government do?
Today Gordon Brown's talking about promoting shared ownership - the £3million he's promising to spend helping 2,000 people buy their first homes - is sure to be welcome to them but not budge the housing market as a whole.
He's promoting international action at important meetings of the G7 and IMF in Washington at the end of this week - which may help avert a future crisis but can do relatively little to solve this one.
No doubt he hopes that the Bank of England will cut interest rates on Thursday - although he must know that these cuts are only being passed on to a few mortgage holders.
He has just seen his chancellor deliver a Budget in which he could do very little - beyond let borrowing rise still further - because there is no money in the coffers to spend.
So, like us all, Gordon Brown finds himself largely a spectator - watching, hoping, perhaps even chewing the odd fingernail - as we all wait to see if this is simply a "market correction" as part of an economic slowdown or the beginning of something much much worse.
