There could hardly have been a gloomier backdrop for the Bank of England's decision to hold interest rates yesterday. Halifax reported that house prices lurched down 2 per cent in June and share prices fell to 21.5 per cent below their high last year.

It is the speed with which the economy seems to be unravelling that is so unnerving. According to Halifax, house prices have fallen 4.5 per cent in only two months, which economists say is the steepest fall in 50 years.

More retailers yesterday reported a sharp downturn in trading in recent weeks. Primark, the fashion retailer that has been taking the high street by storm, said sales growth had ground to a halt in the past three months, having been at 4 per cent in the first quarter.

Barratt Developments became the latest housebuilder to warn of job cuts, announcing plans to lay off 1,200 staff.

There was more grim news from across the Atlantic where Fannie Mae and Freddie Mac, the two giant companies that underpin much of the US mortgage market, saw their shares tumble amid fears that they will have to be bailed out.

Back at home, the most alarming news was perhaps the slump in ITV advertising bookings for September.

As the advance booking deadline passed, advertising agencies said they expected ITV1 to be down about 13 per cent.

ITV's boss, Michael Grade, has been hoping that its revenues would hold up better than in previous downturns, partly because its airtime is relatively cheaper and because companies “know that TV advertising works”.

ITV's revenue has indeed been more resilient so far, certainly compared with the 12.6 per cent fall in advertising in May and June reported last week by Trinity Mirror, the newspaper group. ITV bookings were down 2 per cent in June and 4 per cent for July and August. But the collapse in bookings for September suggests big advertisers are very nervous about consumer spending after the summer holidays.

This wave of bad economic news has brought calls for the Bank of England to cut rates. Critics point to the fact that two-year fixed mortgage rates are now at an 11-year high.

But it was no surprise that the Bank sat on its hands yesterday, given the mounting inflationary pressures in the economy. The members of the Bank's Monetary Policy Committee will have seen the latest inflation figures to be released next week. They could well be horrible.

The worst thing the Bank could do would be to make a move now that would have to be reversed when the direction of the economy becomes clearer.

It would be so easy to make a mistake. A bit like Dancing on Ice.

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