Analysis
By Evan Davis BBC economics editor

Bank of England governor Sir Edward George has predicted a "gradual moderation" of house prices and consumer spending, downplaying recent concerns about the economy. This is Evan Davis's reaction. On the central macroeconomic issues facing us we had the reassuring official line from Sir Edward.

In fact it was more reassuring than I thought we were going to get.

The economy might go crash, bang, wallop rather than just gently re-balance

He was reassuring on whether the banks have over-lent and reassuring on house prices. Consumer spending might slow down but only moderately and the private sector gets decisions right.

In a sense, he has a point. Maybe all that's going to happen. That's Gordon Brown's forecast and many economists are forecasting the same.

Less emphasis

It has to be said though that one can see a lot of dangers in the year ahead.

Sir Edward was aware of them but was putting less emphasis on them than perhaps some others would.

Those dangers are that the economy might go crash, bang, wallop rather than just gently re-balance over the next year.

The economic uncertainties make a decision on the euro quite difficult

The crash, bang, wallop scenario says that the banks have overdone it and consumers have overdone it and when they overdo it they don't gradually unwind their excesses - they come down with a big thump.

And in a sense, there's almost nothing you can do about it.

You can cut interest rates to try to encourage consumers to carry on spending - but if consumers are determined to come down with a thump, they come down with a thump.

Return of inflation?

There's another worrying scenario.

The pound is falling at the moment. That might push up prices and so even if the bank wanted to cut interest rates they'd be saying "my goodness, inflation is back in the system, we can't do anything about it".

So there are lots of little hazards over the next year getting in the way of this dream scenario that Sir Edward was painting - that everything unwinds and rebalances in a slow, gentle way.

Another thing is that the economic uncertainties we're facing over the next year make a decision on the euro at this particularly juncture quite difficult.

At the moment, we don't know whether the economy's going to rebalance gently, carry on with consumer spending soaring ahead and require higher interest rates, or go crash, bang, wallop and require lower interest rates.

With those huge uncertainties - and most economists think there are more than the usual uncertainties - making decisions about fixing your currency to another one at this particular juncture is quite hazardous.