(1) The terms of the banks’ recapitalisation programme will come to be seen as too punitive.
(2) Alistair Darling will announce some modest tax cuts – targeted on low income workers and smaller businesses. They will be too small to make much of a difference to the path of the recession but Labour will attempt to present themselves as the real friends of the low-paid and business.
(3) The Tories will say that tax cuts now (unless funded by spending restraint) are irresponsible and will make it harder for the Bank of England to cut interest rates. Conservative spokesmen will be instructed to say ‘Britain must live within its means’ at every possible media opportunity.
(4) The Bank of England will cut interest rates but not as quickly as necessary and Britain’s recession will be among the deepest in the developed world.
(5) The Conservatives will stay in the economic policy game by announcing lots of sensible but small measures to help small businesses and families.
(6) George Osborne will establish an economic advisory council including big beasts like Ken Clarke, John Redwood and Lord Forsyth.
(7) As recession bites and people fear for their jobs and homes the Tories’ opinion poll lead will grow again.
(8) A YouTube ad targeting Brown’s economic bust will be as symbolic for the 2010 General Election as the Labour isn’t working poster was for the 1979 election. Something like this (used against George W Bush) should do the trick:
(9) The Tories will win the Election but inherit dire public finances. There will be enormous debate within the Conservative Party as to whether George Osborne’s first Budgets will need to deliver spending restraint and tax rises or spending restraint only. Opponents of tax rises will prevail.
(10) Burdened by debt and an unreformed public sector, Britain will underperform our major competitors for much of the next decade.