Chancellor Doesn't Seem Overly Unsettled By the Chill in the Air

Weather forecasts are notoriously unreliable, but Mervyn King and Alistair Darling seem to be living in completely different climates. The Bank of England governor tells us he detects a 'feeling of chill in the economic air', but Alistair Darling is still eagerly seeking patches of blue sky between the clouds, while repeating the faintly desperate-sounding mantra that 'the economic fundamentals remain strong'.

House prices are plunging faster than during the early 1990s crash, and unemployment has increased for six months in a row, with last month's 20,100 increase in the number of people claiming jobless benefits the largest in 16 years.

After the Bank's gloomy quarterly Inflation Report predicted economic growth would be 'broadly flat' over the next year, Darling did say he would 'support families and business through these tougher times' but insisted any chilly weather that does exist must have blown in from abroad - and in any case is not as bad as what happened 'in previous decades' - ie, under the Tories. He has a point: for George Osborne to be claiming superior economic competence is a bit rich, given the devastating recessions of the early 1980s and early 1990s, and the fiasco of Black Wednesday. But many of the homeowners battling in vain to remortgage, or to scrape together the cash for this month's fuel bill, barely remember those dark days. They are concerned about tomorrow, not 1992.

Their distress is not helped by the fact that, almost every day, another bright idea for a quick-fix economic rescue plan mysteriously emanates from some corner of the government - and is hastily squashed. This looks like dithering; and it also raises the false hope that, somehow, Brown and Darling will be able to turn the housing market around.

The contradictory signals about declaring a stamp duty holiday were the worst example. It would not have taken a brilliant strategist to realize that any suggestion stamp duty might be suspended in the autumn would simply give buyers yet another reason - as if they needed it - for staying away from the estate agents until then.

If it's the Prime Minister who's firing off these plans, it raises the question of whether Brown is already writing his Chancellor out of the picture. Certainly, sacking Darling - and hoping some of the blame for Northern Rock and wider economic wobbles go with him - may be tempting.

Jack Straw's name has been mentioned, and there have even been mischievous rumors that David Miliband was offered the keys of Number 11 in exchange for burying his leadership ambitions - at least for now. He, meanwhile, has reportedly already offered the job to the oleaginous Alan Milburn in the event of a successful coup d'état

But it may just be that the notoriously controlling Brown is wary of leaving Darling to get on with his job - a fate just as likely to befall any successor. Much more important than shuffling the personnel is finding a new way to talk to the public about what's going on. Over his decade at the Treasury, Brown honed a bizarre cut-and-paste vocabulary, banging home his favorite phrases in interview after interview, speech after speech. It began with 'prudence', but over the years he was intent on building - then not putting at risk - a 'platform of stability'; terribly keen on 'meeting the challenges of globalisation' (and challenges of many other sorts); and definitely not in favor of 'beggar-my-neighbor policies'.

The repetitive nature of Brown's pronouncements may have suited the long years of economic calm. But Darling seems to have inherited more than his job from the Prime Minister. The 'platform of stability' made an appearance in his debut Mansion House speech earlier in the summer; and current favorite 'the economic fundamentals are sound' is a classic Brownism.

The problem is that people don't live on 'platforms of stability', they live in houses. And the Chancellor's insistence that the 'fundamentals are sound' is reminiscent of an estate agent showing a young couple round a grotty studio flat saying 'it's got great foundations'.

Ironically, given central bankers' reputation for impenetrability, it is Mervyn King who is explaining the credit crunch to the public. As well as detecting the economic 'chill', he warned last Wednesday that we are 'going through a difficult and painful adjustment' to higher energy prices and more expensive borrowing. In other words, things are going to be tough for the next 12 months or so: get used to it.

He also made clear that at least part of the problem is home-grown, and that a large share of responsibility must lie with the banks, which have overseen an 'imprudent period of excessive lending'. Now that must be gradually undone, as banks tighten up on lending, in what he has previously called the 'great unwinding'.

Indeed, King seemed irritated at the impression created by hints and rumors from ministers that a clever little measure or two could unlock the mortgage markets, or restore the housing market instantly to health. 'Pretending there's a magic solution is not the answer,' he said.

Unfortunately, he's right. The government should focus its fire, and scant spare cash, on relieving the distress of those at risk of repossession, unable to afford to heat their homes, or suddenly out of a job - not on subsidizing people to buy houses that are sliding in value. Most of all, Darling - or his successor - must tear up Gordon's little book of clichés and have what King called 'an honest conversation' with the public.

· William Keegan is away