Darling will stick to his guns on CGT

He would say that he had presented his thoughts on the reform of capital gains tax, and had since been strongly advised that they did not work, so he had decided to drop the whole project.

Unfortunately, we do not live in an ideal world. Darling will not drop the idea for two reasons, one political and one important. The political one is that David Cameron's Tories would accuse him of a U-turn if he changed his mind now and, for reasons that only politicians understand, this seems to matter more than doing the right thing.

The second one is concealed deep in the documents that came out at Pre-Budget Report time. They show the Treasury expects the reformed capital gains tax to yield considerably more money. The headline rate may be dropping from 40% to 18%, but this is more than offset by the abolition of indexation relief, which takes into account the role played by inflation in the creation of the apparent capital gain and, of course, taper relief, which had the effect of reducing the rate from 40% to 10% for entrepreneurs.

The brutal fact is that, however powerful the case against the reforms, the Chancellor will find it hard to abandon them because he needs the money.

We seem hell-bent, therefore, for the worst of all worlds. The Treasury has clearly been shocked by the deluge of protest, and is looking for ways to make concessions that would show it appears to have listened to the critics while minimising the effect on revenues.

This is a formula for complication, one that creates carve-outs from the CGT regime for special interest groups, and therefore turns a simplification exercise into something every bit as anomalous and complex as that which went before - but without its merits. The protesters will have fallen victim to the Chinese curse that gives them what they wished for.

Actually, the real point about CGT is the clue it gives us to the wider concerns in Whitehall about the state of Government finances. At the moment, the boat is just about steady in the water but there seems little doubt that we are heading for an economic slowdown. When that happens, as one-time Tory Chancellor Lord Lamont would surely confirm, the public finances deteriorate far faster than the underlying economy.

It is a particular worry that so much of the tax paid comes from the financial sector, which is where the pain is likely to be felt first. So on top of all the subprime woes and difficulties we all face with a credit crunch, it is highly likely that next year could be the one when the Government's finances begin to unravel too.

IT really is quite astonishing what is happening in retail sales if you look at individual cases, rather than soulless national statistics.

The figures from DSG International, the Dixons, Currys and PC World group, cast a long shadow over the market yesterday, but really they should not have. This autumn has been a continual diet of bad news.

DSG has quit the High Street in favour of retail parks, but can hardly have been cheered by what its neighbours have been reporting. B&Q, the group that for so long could do no wrong, has woken up to find its market has moved on - and if it knew where it had gone, it would be more convincing in its efforts to catch it up again.

Home Retail, the group that owns B&Qrival Homebase, has its troubles too. In its September trading statement, it reported a slowdown in its like-for-like comparisons. While it might still squeeze out an increase in profits, it is notably cautious.

Kesa, the company that owns Comet in this country, is another to be focusing on cost control in the absence of strong retail growth. The sports clothing sector is also suffering. Putting to one side Sports Direct because some of its problems are untypical, other stalwarts such as JJB Sports have seen profits halved. And so it goes on.

It is not really any better in the town centres. Woolworths' shares now cost less than almost all the stuff it sells, which is saying something. French Connection boss Stephen Marks has reported that "things went a bit pear-shaped" after a good start to the year.

Next is moving to reposition its stores by making its offerings more aspirational, whatever that means, and must be hugely relieved to have such a powerful internet mail-order brand. Wherever your look outside the food sector, it is hard to find anyone with a convincing story to tell.

There is a lot of ground to be made up in the four weeks to Christmas if the New Year is not to kick off with a string of profit warnings.