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Governor of the Bank of England Mervyn King does not think the economy is going to go into recession in the next few months but he came much closer today than ever before to admitting that it was possible.
Introducing the Bank's quarterly forecast on the outlook for inflation and growth he warned that things were tough and it was going to be a bumpy ride.
The economy has already slowed a bit, is likely to slow some more and if there are any more sudden nasty shocks from either home or abroad it might just start going backwards - negative growth as it is euphemistically termed.
That is not the way he would bet, but it would be foolish to ignore the possibility.
At the same time there is little prospect of inflation coming back under control in the short term, if only because most of the forces pushing prices upwards come from abroad where neither the Bank of England nor the UK government have any influence over events.
Driven by the surge in growth from four of the world's most populous countries - China, India, Brazil and Indonesia - the world economy is overheating. The building blocks of economic growth - oil, copper, steel and, by extension, cereals and foods - are in short supply and this has sent prices soaring. No one says they are going to stop growing, so there is unlikely to be much respite on prices.
To make matters worse the pound is falling against other countries. It is down almost 20 per cent against the euro in the last 12 months making everything we import from the eurozone that much more expensive.
Luckily it has held up much better against the dollar in which oil and quite a few other commodities are priced so this has cushioned the effect of the price rises. But sterling is overvalued against the dollar - witness how low prices seem to us in New York - and it is questionable how long this advantage will last.
The coming prospect of economic stagnation and inflation together has raised again the spectre of what was known in the Seventies as stagflation but the truth is we are a million miles from those traumatic times when inflation rose to 26 per cent, the UK economy was far less competitive than it is today and there were no growth hotspots like China, which offer the hope of pulling the world through the worst. That, however, is little comfort for a population and a Government which has grown complacent on the back of 15 years of uninterrupted growth. It will be uncomfortable to be reminded that economies like share prices can go down as well as up.
Another lesson we need to relearn is that while the Bank of England is doing its best, there is not much more it or the Government can do. The tools to counter recession are lower interest rates and higher government spending but even if we could afford these they would add further to inflation. The tools to restrain inflation are higher interest rates and tight government spending. But they work by slowing the economy which of course would make more likely the prospect of recession.
The two objectives are in conflict and one policy cannot meet the needs of both. So when Mervyn King says he does not know what will happen, it is best to believe him.
