Gordon Brown is due to give a speech to the TUC this afternoon in which he will admit for the first time the government's need to cut costs, inefficiencies and unnecessary spending on low priorities. The Conservatives argue Brown is in “full retreat” on this issue, whilst Lib Dem Vince Cable has stolen a march on the Tories and announced that there should be no “ring fenced” areas of spending. Nobody can deny the need for cuts, but it looks as if Bob Crow and other union heavies remain oblivious to economic reality. Looks like the next government may have to prepare for a return to seventies-style industrial relations.

Sticking with economics, new figures were released today showing that the Consumer Price Index (CPI) has dropped to 1.6 percent, its lowest level since February 2005. Deflation – commonly defined as falling prices – is that wretched bogeyman the government and the Bank of England keep trying to save us from. Deflation isn’t necessarily bad (what’s bad about the value of your money increasing?) but it’s a killer for debtors, which explains why those in power desperately want to avoid it. Expect monetary issues to gain increasing political importance.