By Hamish McRae

We are still in the early stages of the downturn but we can - in a funny way - see more about the policy response to it than we can about its scale and shape. It is clear that there will be further cuts in interest rates and the PBR next Monday will give us an idea of scale the fiscal stimulus. This has to be done - and I have sketched some concerns about it in the column today.  But we are still very much flying blind about the scale of the problem. My main concern is that if too much ammunition is used up now there won't be much left if the downturn proves prolonged. At the moment the received wisdom is that recovery gets going in the second half of 2009. I am not sure it can really do so until the housing market turns and that may be further away. Brighter note: even the more gloomy forecasts suggest that the recession will not be much more serious than the earlier 1990s and hence not nearly as serious as either the 1970s or the early 1980s. We need a bit of such comfort right now.