Editor's blog 20 May 2009: Catching the buzz about living in deciduous times

Good evening. Another unexpected leave of absence ends - or was it absent without leave? It's so hard to tell these days.

Anyway, you have had fresh Maynard Doctrine, revealing the Conservative Party's modest proposals on public spending for their inexorable-looking arrival on the preferable side of the Mace next summer. And you are not the complaining types: I know you.

You may already have caught up with the BMJ-Kings Fund debate on clinicians and management from late April - but if you haven't, check it out. Professor Maynard of this parish is on particularly good form.

Much has been happening - the Rose Gibb judgment; the Audit Commission report on boards; the regionalisation of the commercial directorate; David Nicholson coming out as an unashamed elitist when it comes to leadership. A lot of people have had their eye on the swine flu, and rightly so. The next day or two will hope to bring a 'Not The NHS News' on some of this and other material, but a new addition to the FT website caught my eye and brought this post.

There is, at one level, no surprise in the IMF's suggestion that lower national deficits are better than higher ones. Nor are the policy choices on offer (higher taxes or public spending cuts) much of a shock - likewise the IMF's preference for the latter option.

The IMF's interesting observations are that because of financial weaknesses in banks, they will be less able “to sustain credit provision at levels required for a robust economic recovery”. Mmmmm. Interesting times. An asset price bubble in housing, supported by low interest rates and lax lending of unprecedented multiples of salary and underpinned by securitisation of the worst-quality mortgage loans, has led to meltdown and the exposure of poor business models and lending practices.

And still the IMF is implying that the problem is about credit.

At the macro-level, it is still correct, even with the quantitative easing presses billowing out mney as if there were no tomorrow. Inter-bank credit is still a high spread above base rate. This is because the banks do not trust each other. That is probably because they know that they have not yet put all their bad news out there, and they suspect their competitors (those still standing) are in the same leaky boat.

The IMF suggests that more credit is needed. How will this not reinflate the deflating bubble, exacerbating inflationary pressures from quant easing?

The IMF also suggests that households “are likely to retrench spending to reduce debt and rebuild savings”. This imputes too much rationality on the part of the relatively unaffected groups like those in secure employment or pensioners with fixed or final salary benefits and no mortgage commitments. It's not everybody, but it is a significant group.

Those retrenching their spending in a big way are those whose jobs are at high risk or have gone. There is another category - the big borrowers, on interest-only mortgages that allowed them to have the big house in the good area. These people have benefited massively from the Bank of England's interest rate cuts.

But the stay of execution is temporary. It seems unlikely that there will be an economic recovery as soon as the Treasury thinks - in Q4 of the financial year. But in time, and barring Swine Flu mutating and getting really messy on us, a recovery will come. When it does, base interest rates will not be 0.5% for one moment longer than necessary.

What does all of this mean to the NHS? We know that the unprecedented spending growth rate since 2000 ends after this financial year. We know that all eyes are on efficiency, cost-effectiveness, CQUIN pay, commissioning, quality: the words are like mantras.

Yet the sense of urgency over the coming slowdown in public spending is by no means widespread across the NHS. Of course the smart people have got it. That is what smart people do: they get the obvious quickly.

The fear must be that years of easy money have de-coupled a significant minority from the sense that the public's taxes come from the evergreen Magical Money Tree. Just now, we are living in deciduous times.

You will have heard or read about the plight of the honey bee as a result of colony collapse disorder. It is one to be quite as worried about as Swine Flu or the measles outbreak in Wales. No pollination = no fruit.

The ecosystem of the NHS is not immune to colony collapse disorder.

Both yesterday and today, a bee blundered in to my room through the open door, and struggled to get out the window. With more care than I would normally have taken, I sent it on its way gently with a copy of Private Eye. Each time, I worried about the bee after it had gone. I wasn't too sure of its chances.