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It was long predicted but no less grim for that: The , external and - in a week when images of Margaret Thatcher seem to be everywhere - a promotion for a new film but also a reminder of the past.

Privately ministers admit there are now two scenarios for the economy. Flat growth and rising unemployment is, believe it or not, the good scenario. The bad would follow a eurozone country defaulting and the consequential collapse of banks across Europe.

The politics of this were made even harder today by the Liberal Democrat Lord Oakeshott - a friend and one-time adviser of Business Secretary Vince Cable.

He said ministers needed a lesson in economics if they believed the eurozone crisis was to blame for Britain's rising unemployment since today's statistics reflected what had happened in the economy about six months ago.

The government's reaction will come in the chancellor's Autumn Statement a week on Tuesday.

I understand that ministers are working on proposals to meet the three demands of the employers' organisation the CBI for:

* a scheme to encourage the creation of jobs for those who are young, unemployed and have few qualifications

* a rebate for high energy-using industries to limit the impact of soaring carbon prices and green taxes - which were today partly blamed by RTZ Alcan for the closure of its plant in Northumberland

* And, most intriguingly of all, a scheme to underwrite mortgages to lower the risk to lenders when faced by those who want to buy a house but simply cannot afford the necessary deposit.

This will be in addition to an effort to incentivise private companies to invest in infrastructure projects.

The test, of course, will be whether all will that be enough to make any difference.