“In 2008 it is likely that a less buoyant housing market will go hand in hand with slower growth in consumer spending. In the short run, that will slow economic activity, possibly quite sharply.”

So said Mervin King, governor of the Bank of England, this week, thereby whisking away any lingering doubt that we’re in for a bumpy ride this year. On the other hand, the Bank has made it clear that we shouldn’t expect its Monetary Policy Committee to copy the Federal Reserve and take an axe to interest rates, not while energy companies are extending their business to fuelling inflation. In other words we’re facing the slump of 2008, as we say on the cover.

At the risk of repeating ourselves, construction firms do not need to start forming an orderly queue for the lifeboats; most have 12 months of work on their books and this provides an all-important bulwark against a sharp rise in unemployment. But that doesn’t mean they can shrug off the turmoil in the world’s financial markets. This week we saw the first signs that dwindling consumer confidence was affecting the construction sector sooner than might have been expected. This comes from a survey by the Federation of Master Builders (page 19), which found that 40% of smaller firms reported a drop in enquiries. This is not entirely unexpected: it is, after all, difficult to build extensions if the bank has clamped down on your borrowing or you’re about to lose your job in the City. The consolation prize is that it is becoming easier to hire subcontractors and staff, but in truth that’s not much consolation: falling enquiries are closely related to rising anxieties.

Of course, even small contractors have it good compared with the stricken housebuilding sector. The closures at Gladedale (page 9) and a 15% drop off in sales (page 23) are the latest dispatches from the home front. A comprehensive exploration of the problems housebuilders face is not the most cheerful way to kick off our brand new housing section, but it helps us to appreciate the scale of the problem. And as misery loves company, housebuilders can look forward to drowning their sorrows with the prime minister, who could hardly have picked a worse time to make raising housing output into a policy centrepiece. As the opposition spokesman Grant Shapps said this week, he doesn’t have a “cat in hell’s chance” of meeting his target.

So what’s being said in the major housebuilders’ sales meetings? David Pretty, Barratt’s former chief executive, says firms have two plans to choose from (page 38). Plan A anticipates a gentle dip in sales, lots of motivational speeches to the sales force and a return to modest growth later this year. Plan B will involve office closures and much reduced land acquisition programmes. According to Pretty, it won’t become apparent whether it’s A or B until the spring. The evidence, though, would seem to point to a decision being taken much earlier than that.

Denise Chevin, editor