Comment: The return of boom and bust

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The inflation rise is significantly above the Bank's official target of two per cent. Meanwhile, factory gate inflation - the prices charged by manufacturers for their goods - has reached double-digit figures for the first time in 20 years, which will put further pressure on high-street prices. Many families, faced with an estimated increase of a fifth in the prices of basic foods over the past year, will look for higher wages to compensate; fear over their jobs is more likely to act as a brake on pay demands than the Chancellor's call for wage restraint.

This is the context for today's two-pronged attack by the Tories: while Mr Cameron lambasts the Government's economic record, the Shadow Chancellor, George Osborne, has attacked ministers' inability to deal either with economic failure or with social breakdown. The problem for the Tories is that their scope for helping families and companies through tax cuts would be severely restricted by the downturn. Meanwhile, Mr Cameron has today suggested introducing aspects of the US Chapter 11 insolvency rules, which would, at the least, give struggling companies a breathing space in which to restructure and come to terms with their creditors.

But whatever the Conservatives' difficulties in formulating a response to a tough economic situation, they pale beside the challenge now facing the Government. Gordon Brown used to boast that he had abolished the cycle of boom and bust; after years of reckless spending and easy credit, the size and severity of this downturn looks likely to prove him badly wrong.