In the UK we are two years away from the general election which will mean that economic data will be closely analysed by both commentators and politicians in order to demonstrate whether we are recovering or not.
Recent events will not provide much comfort to the coalition government which placed so much faith in austerity as the way to solve this country's economic problems.
However, the reality of the situation is that the economy will be influenced by as much by events overseas as by whatever policies are being pursued by the incumbent government.
At present the portents do not look good.
For starters there was the slide in shares last Thursday though there was a rally on Tuesday because of the announcement by the Central Bank that stimulus policies would continue.
Some argue that last week's decline was caused by a concern that the increases enjoyed in recent months have been false and far too reliant on the vast amounts of money that has been pumped into the economy as a result of quantitative easing.
The view among come economic commentators is that there are underlying conditions which may create another crash in stock values. Any sniff of governments abandoning quantitative easing - which would reduce liquidity in the system - will inevitably cause panic.
The need to invest huge sums of the money we should not forget was a policy that emerged in the aftermath of the global financial crisis and in the belief that unless something drastic was done there would be a 'domino effect' of more banks like Lehman Brothers going bankrupt.
Avoiding depression caused by a deflationary spiral was considered essential through the use of expansionary fiscal policy in both America and Europe.
Nonetheless the financial crisis has caused much pain and the impact has led to many governments, including our own, being elected on policies based on fiscal contraction which eschewed the belief that Keynes was correct.
It is also being pointed out that there are other portents which may suggest that another crisis is around the corner.
China's economy is showing signs of weakening which has caused some to factor in the decline seen in shares last Thursday.
Undoubtedly China's phenomenal growth could not continue but given the amount of money its banks have invested in the west any diminution will cause uncertainty especially in countries which to export to it.
Japan, in particular, is a country to which this applies.
Even though it has been experiencing a surge in activity as a result of the policies that have been implemented by its new government led by Shinzo Abe based on freeing markets coupled with a vast increase in public spending, any potential drop in one of its most vital export markets will result in ramifications that will be felt worldwide.
The fact that Japan's shares have risen by an average of 25% since the New Year would suggest that over-optimism may have become endemic.
As we have already discovered with terrible consequences, the world's economies are inextricably linked and no country is immune.
Some commentators are even suggesting that Chinese banks are exposed to the sort of bad debt that caused the financial crisis five years ago. Clearly this is a terrible vista that we should pray does not happen.
Whatever the outcome of any referendum on our continued membership of the EU will not take away from the fact it still remains a very significant export market.
There are still serious problems in many countries which will not easily be resolved and economic data emerging from European countries does not make good reading; most especially from Germany.
Because of problems elsewhere, China again, Germany's export markets have not been terribly good and, as a result, its economy has barely grown. In fact it is only due to increases in wages which created more domestic consumption that its economy grew at all.
Which brings us back to what is going on in this country?
For those with money to invest there is always the temptation to invest in property which some believe is likely to be unhealthily stimulated by the policies brought in by Chancellor George Osborne.
It is being pointed out that all that Osborne's policies will achieve is to keep property prices higher than the 'market' would suggest they should be though anyone thinking about moving to London would wonder if there is a problem at all.
That said, there is a view that the overall policy of fiscal contraction has not produced the desired result and that there should be a revision of the belief that this is a sensible way to manage the economy.
As George Osborne is aware, there are many, including many in the International Monetary Fund, who are advocating a need to review their belief in the efficacy of austerity.
Perhaps if he has time he should have a look at a new book which was published last week, Austerity: The History of a Dangerous Ide a by Mark Blyth and published by Oxford University Press.
Blyth who is Professor of International Political Economy at Brown University explains that austerity is a politically-driven agenda which is used by governments to effectively 'punish' electorates for their assumed profligacy.
But as Blyth points out the debt that we are saddled with is largely made up from the fact that we had to bail out banks (such as Royal Bank of Scotland) which engaged in an orgy of bad lending and which could not be sensibly justified.
Many have consistently argued that austerity causes countries to reduce their spending simultaneously. The consequence is that overall consumption declines which simply makes matters worse.
Blyth points out that there is no evidence that austerity has ever worked.
Indeed, he points out that the reason why the US has recovered more rapidly than countries in the eurozone is precisely because President Obama has persisted with Keynesian policies.
Given today's announcement by George Osborne that he has been able to secure additional cuts in spending in departments such as the Ministry of Justice, the Department if Communities and Local Government and the Cabinet Office would strongly suggest that austerity will continue.
However, what will be really interesting will be the announcements George Osborne makes in the spending review on 26th June which will take us beyond the next general election.
It might be assumed that he tell us that for the sake of consistency the nasty medicine being administered as part of austerity will continue.
However, let's hope he also makes some announcements about how he intends to support innovation in industry and manufacturing which are the only way we will really be able to develop the growth that will get us out of the economic problems we are experiencing.
Given the ongoing debate about the implementation of the recommendations contained in Lord Heseltine's No Stone Unturned this would be most welcome; especially here in the West Midlands.
