Just two weeks ago, the Chancellor, Alistair Darling, was being roundly condemned for exaggerating the size of Britain's economic crisis by saying it was the worst for 60 years.
But with the collapse of Lehman Brothers, his doom-laden predictions are beginning to look optimistic, with many respected City figures openly comparing events with the Wall Street Crash of 1929.
Although no-one is predicting another Great Depression, the crisis is widely seen as the worst in living memory and Alan Greenspan, the former chairman of the US Federal Reserve, described the Lehman failure as "a once in a half-century, probably once in a century type of event" which was the worst "by far" he had seen in a career spanning five decades.
Jonathan Loynes, chief European economist for Capital Economics, predicts a million job losses in the next two to three years and a further slump in house prices before recovery begins. "The collapse of Lehman Brothers will only prolong the uncertainty in the financial markets, meaning banks will remain reluctant to lend to each other and the credit crunch will continue for a long time to come," he said.
"If people can't get loans the housing market will continue to fall and I think house prices have got a lot further to go before they hit bottom. They will probably keep coming down for another year or two.
"We also think the economy will contract next year and around a million people will lose their jobs.