From the unforgiving perspective of the markets, Alistair Darling’s first Budget was bound to look like a sideshow in a week where central banks were pumping gigantic sums into traumatised global credit markets. Yet the credit upheaval casts a long shadow over both the Budget and Labour’s electoral prospects thanks to its impact on the housing market, which extends far beyond the fallout from Northern Rock’s failure.

A housing market that has played a central role in driving growth in the current economic cycle is now slowing. If the turmoil in credit markets is not resolved soon, the growth forecasts that the chancellor revised downwards in the Budget will still look wildly optimistic both for 2009 and 2010. For, as Wednesday’s housing finance review rightly points out, the securitised market for issuing mortgage-backed securities is currently defunct.