The current trade deficit and the treasuaries spending deficit will finaly hit home with avengance. The government has borrowed to the hilt during the up years of the financial cycle, but with the finacial sector crisis hammering profits from the city, a huge source of tax recipts will shrivel up. Increasing unemployment (but not a crisis level in 2008) will add a burden to the treasury. Core inflation will start to rise on the back the higher factory gate prices in the UK and the countries that manufacture finally feeding through to the UK high street. The falling pound will contribute to this over the comming months. The result will mean the Bank of England will have to choose between raising interest rates to fight inflation and being responsible for a wave of bankruptcies or continue pumping money into the economy with low interest rates and loose control of inflation.
On the back of this the government will need to start cutting into services. Its borrowing is already very alarming, it will either cut costs or have to borrow so deeply it becomes one the major talking point of the financial year.
Labour will be basicaly screwed, Brown will need something dazling to look innovative and hold onto power so will propose proportional representation for the commons in the queens speach. (probibly anoncing a referendum on it).
"Begger thy neighbour" will become another big political talking point as the dollar conintues to weaken.
The overall global slowdown will cool inflationary pressures in the UK, if the BOE raises interest rates to deal with it.