From Global to Local

Flurries of numbers, plunging charts and talking heads describing fiendishly complex bets - TV reports about the credit crunch seem divorced from real life. Figures yesterday showed more people working than ever before. Some of the extra jobs reflect migration, but the proportion of people in work also edged up, from 74.8% to 74.9%. That encourages the comforting thought that the frenzy within the casino of high finance has no effect outside.

Dig into the detail, however, and there are ominous signs that this rosy picture will not last. The government's push to get the long-term sick into work may be one reason why the total tally of jobs is still growing. But the various counts of traditional unemployment - so low for so long - have finally started to rise. Not dramatically, it is true, but then bosses are always reluctant to lay off workers until they really are sure that hard times have arrived. Like the nasty symptoms of some incubating disease, unemployment shows itself only after a delay. All the more so because the numbers take time to process - some of those reported yesterday related to as long ago as January. And since January, thanks to the distant dealings of those financial markets, mortgage lending has started to dry up, causing houses to fall in value and home buyers to rein in their spending.

Giving his regular report on the economic outlook yesterday, the governor of the Bank of England was thus right to warn that the "balance of risks to growth ... is on the downside". It was refreshing to hear Mervyn King signal that he understands the perils of recession, albeit in the dusty language of a central banker. For the Bank appeared complacent last week when it failed to cut interest rates. That inaction was wrong, but Mr King's inflation forecasts yesterday made it a little easier to understand. Galloping food and petrol prices are set to push the cost of living for several months to come. As early as next month Mr King is likely to be forced to pen a public letter to the chancellor to explain why he has allowed inflation to veer so far from the target. His only plan for getting it back on track is to allow families to feel the squeeze to the point where they slash their spending, a point which will arrive later if interest rates are cut.

The governor talked in terms of a tricky balancing act - with rates cut sufficiently fast to avoid recession, yet sufficiently slowly to avoid inflation running out of control. But this may be one high-wire act that cannot be performed without serious injury. From finance to food, global markets are starting to make themselves felt, whether at the job center or the checkout. They are a distant abstraction no longer. They are coming to a high street near you.