This storm is just beginning

Even in the banking world, the bail-out has failed so far to encourage the banks to start lending to each other again on anything like the scale needed to free up liquidity: the Libor inter-bank lending rate remains very high. Lack of credit in the system and rapidly spreading pessimism about the economy is already having serious real-world effects: yesterdays' jump in UK unemployment figures was the largest in a single quarter since the dark days of 1991. Bank of England Monetary Policy Committee member David Blanchflower predicts that two million will be jobless by Christmas. And yesterday's dismal US retail sales for September are mirrored here in desperate price-cutting and closed businesses on the high street.

All of that will have a harsh political impact and not simply in the resurrection of unemployment as a political issue for the first time in more than a decade. Tax revenues will tumble at the very moment that the Treasury needs vast sums to inject into the banking system. At the same time, welfare payments will inevitably soar, while it is likely that acquisitive crime and the cost of policing it will also rise. The inescapable conclusion must be that spending elsewhere will have to be slashed, and taxes raised.

Already Mr Brown's reputation for economic prudence has been swept away. However much he may enjoy his current role as de facto Chancellor, he will soon have to face up to some very unpalatable choices at the heart of government.

Green light

TRANSPORT for London's plan to let cyclists turn left on red lights deserves a cautious welcome. At present, cyclists can be at high risk from lorries and other vehicles turning left at lights, the cause of a number of recent fatal accidents. The new rules will have to have approval from the Department for Transport, but in principle, if cyclists were allowed to move off left before the lights changed, it could make a real difference to their safety. If approved, such a scheme will need monitoring to ensure that it is not abused: we do not want a situation where cyclists feel they have been given carte blanche to ignore the rules of the road. But this is an imaginative step.

It will become more pressing when the Mayor launches a Paris-style cycle hire scheme in London: today Transport Commissioner Peter Hendy has confirmed that the scheme will launch in May 2010. Paris's Vélib' bikes have been a huge success, and when the bikes come to London they will hopefully encourage more people onto two wheels. Anything that makes that experience easier and safer is to be welcomed. With these announcements, the Mayor shows that he is serious about greening London's transport system.

Heroes

TODAY'S victory parade through the capital by Britain's Olympic heroes is a wonderful opportunity for Londoners to put the credit crunch behind them for a day and to remember how good it felt this summer when Britain's athletes brought home one medal after another. They deserve public tribute. Perhaps the spectacle of these sporting achievers will be a spur for other athletes to match or surpass their record in the 2012 Games. Beijing 2008 was wonderful; let's hope London 2012 will be even better.