There is an evocative scene in The Ice Age, Margaret Drabble’s novel about the 1974 property crash, in which Len Wincobank, a property developer who has been sent to jail for fraud, longingly remembers the marvellous food he used to eat.

Wincobank lies in his prison bunk recalling his favourite meals in the boom of the early 1970s, including meat carved from the trolley at Simpson’s-in-the-Strand. The food he gets in the fictional Scratby Open Prison is a poor substitute.

Perhaps today’s Wincobanks – for the financial and property slump that is afflicting the UK again will surely turn up some nefarious dealings – will instead recall their visits to Marks and Spencer Simply Food stores. Those bulging sandwiches crammed with meats, those bottles of freshly squeezed orange juice, those Belgian chocolates!

M&S has become a symbol of Britain’s debt-fuelled consumption binge of recent years and so its disclosure this week of a 5 per cent fall in its sales, which caused a 25 per cent drop in its share price, was a pivotal moment. It was not only M&S shares that fell; the penny also dropped that the UK economy is in worse shape than most politicians have cared to admit.

The point was reinforced by the failure of Taylor Wimpey, the largest British housebuilder, to agree new finance and by profits warnings from Trinity Mirror, the newspaper group, and two car dealerships. The problems of the financial industry since the rescue of Northern Rock, the bank, last year are clearly spreading.

Each economic downturn has such a moment, when the stock market is shocked into submission. In 1973, it was the secondary banking crisis that broke out amid rising oil prices and industrial militancy. In 1980, it was ICI’s dividend cut as Britain entered the Thatcher recession. In 1990, it was the collapse of businesses such as Coloroll and Polly Peck.

This week’s events should not have come as a surprise. “Consumers have been squeezed for the past six months but public companies have been in denial,” says one retail executive. Few have wanted to accept that the UK economy could suffer as badly from financial market turmoil and the credit squeeze as the US one.

Pressures on British consumers have mounted since the start of the year. With house prices falling and banks raising the price of mortgages and other debt, shoppers have found it harder to tap home equity and are less indulged by credit card companies. Meanwhile, the rising prices of oil and commodities have pushed up household bills.

Times like this used to come along every decade. Indeed, the UK economy was notorious for its “boom and bust” cycles. It seemed to have settled down after the Bank of England was given independence in 1997, encouraging more disciplined monetary policy. But the current mix of weak growth and inflation echoes the 1970s.

The government believes that the economy will avoid recession, in the sense of two quarters of negative economic growth. But people are already experiencing personal recessions, in the sense of a drop in their disposable income after paying the bills. That is what led to the sudden buyers’ strike at M&S food stores last month.

Many people hoped the financial squeeze would only be temporary, which is why they ran down savings in the first few months of the year in the hope that things would improve. Optimism that the oil price could soon drop has now gone and consumers and investors have lowered their expectations, settling in for a year or 18 months of pain.

Maybe a period of self-discipline will be all that is needed and the UK economy can bounce back after that. But it is unlikely to be so simple. The economy has been growing strongly, more or less uninterrupted, since the mid-1990s (the 2001 downturn was short and not too pronounced). Many people have not known a recession in their adult lifetime.

In that time, Britain has also gone through a notable growth in standard of living, quality of goods in stores and meals in restaurants. M&S food, for example, can be found not only on the high street but in motorway service stations. Instead of buying sausage and chips on their journeys, the British have snacked on M&S sandwiches and posh crisps.

Britain has become a case study in the phenomenon of “trading up” and mass luxury. People have driven better cars, bought more clothes from designer stores and switched from drinking tea in cafes to cappuccinos in Starbucks. House prices have spiralled and London has become one of the world’s priciest cities.

Stuart Rose, M&S’s chairman, admitted this week that his store had suffered from people “trading down” again. Those accustomed to buying their food in M&S had switched to Waitrose, Waitrose shoppers to Sainsbury, Sainsbury to Tesco and so on. There will be an awful lot of premium goods retailers feeling nervous at the moment.

Beyond this, the British high street has been expanding for so many years that some contraction is due. “We’ve had 30 years of relentless growth in floorspace,” says Richard Hyman, a senior adviser to Deloitte. “Going forward as far as the eye can see, this is going to be a lower-growth and lower-margin business.”

The plunge in M&S shares this week was evidence that this reality has finally started to sink in. Most people have less of an adjustment in store than Len Wincobank’s move from Simpson’s to Scratby. But they face their own reckoning.

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