Voters turn on tax and spend

Between July and September, the economy contracted by 0.6 per cent after being stagnant for the previous three months. But estimates for next year tell a different story: economists are assuming that output will shrink by 2.5 per cent, which would make for the worst single year for several decades.

It would appear that the Treasury's own economic forecasts, made just a month ago, will have to be revised downward. As George Osborne, the Shadow Chancellor, observed today, the recession is deeper than we thought. Meanwhile, new figures show the number of mortgage approvals slumped by 14 per cent last month to a new record low.

Of course, the Chancellor's attempt to stimulate the economy, including VAT cuts, only came into effect at the beginning of December. It will be some time before we know whether they have achieved their end. There was a surge of shoppers in the West End yesterday, but many were buying at discounts of 50 per cent or more. The retail sector, like the rest, is struggling.

There will inevitably be political repercussions. A ComRes poll today suggests that people are, for the first time in a generation, turning away from the politics of high public spending. It suggests that if the Tories enter an election committed to curbing public spending and trying not to increase taxes, they would secure a larger margin than if they matched Labour's spending plans.

This may be an indication that people who are trying to cut back on unnecessary expenditure are alarmed by government profligacy and waste.

There is a role for public spending in the downturn. The scale and the form that the Government has chosen is another matter. The recession is starting to affect real politics.

Keep moving

No one begrudges London Transport staff their Christmas Day or indeed a respite from normal working hours for Boxing Day. But for the Underground to run a reduced Saturday service between Boxing Day and New Year's Day, and for some overground lines to close completely for up to 11 days, is doing no favours to the retail sector. In an economic downturn, it will be harder for shops to attract customers if transport links are not functioning. Obviously, Transport for London wants to use the period to undertake maintenance work but it must take some account of the needs of business, too. Retailers will welcome the suspension of the congestion charge between Christmas Day and New Year's Day but, to boost shops within the zone, the Mayor should consider suspending it for the 12 days of Christmas, that is, until after 6 January.

But in the New Year, many passengers will find that transport has not changed for the better. The drastic overcrowding on Thameslink services was meant to be relieved with the provision of new trains next spring on the most important lines. But commuters are now being told by the operator, First Capital Connect, that there will not, in fact, be 23 new trains available for March next year; instead 15 of them will, if they are lucky, come into service in May. As many as 130,000 people a day use Thameslink and half of all peak-time passengers are unable to get a seat. The problem appears to lie with suppliers to the operator, Bombadier, which is affected by the credit crunch. The Department of Transport is discussing contingency plans if the new trains fail to arrive.

If fares in the New Year are to rise by six per cent for peak-time journeys and nine per cent for off-peak, passengers expect some bang for their buck.

And celebrating...

MIDNIGHT MASS. London is blessed with a great number of wonderful churches and cathedrals, many with exceptional choirs. All of them will be holding Midnight Mass on Christmas Eve to celebrate the feast. They are usually packed: deservedly. What's more, they are absolutely free. Get there early.