The first is oil. I don't see demand, and therefore price, of oil dropping on world markets at all for quite some time. The total demand for energy is not really going to slacken. For the UK, where everything that you buy is transported by lorries, this means that food in particular will be subject to inflation from this commodity alone. Add to that the fact that the take of VAT per litre continues to rise because of the rise in the basic price of oil, and you have a double whammy in fuel and therefore transport costs. Of course, an intelligent and nimble footed chancellor could reduce this inflationary pressure by reducing fuel duty on white and red diesel respectively. However, as Alastair Darling does not fall into either of these categories, fuel inflation will be set to deepen in the UK over and above that of our competitors.

The second is food itself. You have mentioned rising prosperity in the Far East as a factor in increasing prices, as well as the use of grain as a biofuel. But you have not mentioned the rising world population, which is set to increase by about about two-thirds over the next three or four decades. It is to be hoped that the Australian drought will end soon and allow that country to export grain once again, which will help matters. But the underlying trend for demand in food is definitely up. Furthermore, as climate change bites deeper, supplies from climatically marginal countries like Australia will become increasingly uncertain.

Furthermore, increases in oil prices have multiplied prices of fertilisers and pesticides dramatically over the last year and, again, I don't think these are going to drop. It means that the productivity per hectare will be increasingly difficult for farmers to maintain – scarcity bringing us another source of inflation.

Food price inflation started off at the begining of 2007 at about 5 or 6%. It finished the year at about 12%. Whilst graveyards are littered with the corpses of pundits who have predicted this or that doomsday scenario, my guess for what it is worth, is that food price inflation will continue to be in double figures for the next half decade.

And as China purchases wool in (weak) US dollars and we sell the stuff in (relatively strong) UK pounds, I fully expect my Wool Board cheque to be substantially less than the cost of shearing the sheep, for the second year running. The only negative inflation in sight is prices at the farm gate.

Sorry to be so cheerful……

if there was a sterling economic crises, or even just problems, we would see worms coming out the woodwork suggesting we join the euro.

I just can’t make up my mind which scenario is most likely.

In my view the Labour Government’s economic “miracle” is nothing more than them claiming the credit for the decade of the English speaking peoples.

The UK’s position on 10 year growth in a table of the English speaking economies is, of course, bottom (including the honorary members of The Netherlands, Sweden and India).

Brown is taking credit for the decade when the Internet was in English. That benefit is now going as Google catches up with other languages and benefits the non-English speaking economies.

REPLY: YES CHINA WILL BECOME POWERFUL MILITARILY AS WELL AS COMMERCIALLY. THE UK HAS RELIED HEAVILY ON LONDON AND BUSINESS AND FINANCIAL SERVICES AND HAS BOOSTED ITS PROSPERITY BY MASSIVE PUBLIC AND PRIVATE BORROWING.