“For the time being at least, the nice decade is behind us,” said Bank of England governor Mervyn King this week, as he announced some of the gloomiest UK inflation forecasts in recent years. The “nice” decade – for non-inflationary continuous expansion – may be behind us, but the question is whether a nasty economic decade lies ahead.

The data this week were unrelentingly bad. Consumer prices rose by 3 per cent in the year to April, but a much faster rise in the price of goods leaving factories, plus ever higher commodity prices, means it is all but certain to rise further. Weak retail sales, low business confidence and the collapse in house sales suggest that growth will be slow in the next few years as well.