The chronology of the last recession was massive house price inflation in the years of the late 1980's (Lawson +32.0% 1st Quarter of '89) (Brown +25.8% 1st Quarter '03). Then you get an affordability crisis leading to a crash in house prices. Then finally you get the recession that stems from a collapse in consumer confidence and associated job losses.
ERM related interest rates was partly a trigger last time. This time its a credit crunch.
You'll read lots of arguments in the months ahead that there won't be a house price crash or a recession because employment remains high. This is bogus. The unemployment comes towards the end and merely perpetuates and prolongs the recession. Its not initially causal.
I think from the hunted look in Gordons eyes that he knows it will be bad and that there is nothing a small government with no money can do about it.
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