What does the economic turmoil mean for the UK economy? This is not a question about prospects for the next year. It is deeper than that: how well can an economy long characterised by soaring house prices, exploding debt and a dynamic financial sector adjust to a new world?

Attitudes to the new “special liquidity scheme” for banks tell us how little politicians want to consider the worst possibilities. Thus, Alistair Darling, chancellor of the exchequer, told the Commons on April 21 that the scheme would “help alleviate the problems that have seen banks reluctant to lend to each other and in turn support the provision of new mortgage lending”. But Mervyn King, governor of the Bank of England, says “the scheme is not designed to send the mortgage market back to the rather wild lending before the turmoil began last summer”. On the contrary, there “needs to be some adjustment in the housing market”.