Today's survey by the British Chambers of Commerce is a particularly worrying perspective on the economic downturn. The BCC has members across the country and across sectors - so when it reports a sharp change of mood and a drying-up of orders in both manufacturing and services, we should take notice. It is by no means certain, as the BCC predicts, that Britain will endure a recession, defined as two successive quarters of negative growth, but the Treasury's core forecast of a two per cent expansion in the economy this year represents a triumph of hope over evidence. At the same time, food and energy price rises continue to fuel inflation, making it unlikely that the Bank of England's Monetary Policy Committee will cut interest rates to ease the impact of the credit crunch when its monthly meeting gets under way tomorrow.

That gloomy combination of factors helped prompt a further fall in share prices today: they have dropped around 20 per cent from last year's high. House prices are still sliding, bringing dramatic upsets for construction companies Taylor Wimpey, Barratt Developments and Persimmon, while Marks & Spencer's poor trading shows how the impact has reached the high street.

A Government in a stronger fiscal position would have been able to produce some confidencebuilding measures - but instead, the public finances are so weak that the BCC has sent a personal warning to the Chancellor and Prime Minister not to contemplate raising taxes on business. As civil servants today struggle to defend the £1.2 billion annual cost of benefits fraud, part of a welfare bill that will rise if unemployment and repossessions increase further, the squeeze can only get tighter. The storm clouds are darkening fast, but for the Chancellor, there is no rainy-day money.

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