After the best part of three weeks in the Burgundy sun, testing and tasting the best that region of France had to offer by way of drink and food, I had vague hopes that all would look different - better even - on the economic front on my return to the real world.

That hope was rapidly dashed. It is now widely acknowledged that the UK economy is in, or approaching, recession. The debate is moving on to the question of how long this is all going to last.

It came as no great shock when the statistical gurus revised down to absolute zero their estimate for UK GDP growth in the second quarter of this year.

The service sector stalled (with - surprise, surprise - financial elements a major drag), while investment plummeted. Even household expenditure edged down. Year-on-year growth (ie: Q2 2008 compared to Q2 2007) remained positive at 1.4%, but this was the weakest outturn for nearly 16 years.

The UK economy had experienced a historic period of positive growth, with output increasing consistently quarter after quarter since Q2 1992.

However, that is in the past now, and we must expect declines in output in the third and fourth quarters of this year. If that expectation proves correct, then we will experience two successive quarters of negative growth of output, and that is the definition of recession.

So we are set to enter 2009 in recession. Some forecasters anticipate that decline continuing unabated throughout that year. The Bank of England is not quite that pessimistic.

Its central expectation is for stagnation for the second half of this year and the first half of next; and then a return to positive growth in Q3 2009. But their forecast for inflation (on a CPI basis) has risen again.

In May, they expected a CPI peak of 3.7%; now they expect a peak at 5% in the near future, before steady decline, but with the CPI only returning to the 2% target around the end of next year.

The anticipated slowdown in inflation is related to the deceleration in the global economy. Oil and other commodity prices should continue to ease as demand falls back. But this is not guaranteed. The combination of rapidly declining output growth plus soaring inflation makes life distinctly uncomfortable for the members of the Monetary Policy Committee and their counterparts at the US Federal Reserve and the European Central Bank.

This discomfort was exemplified once more by the voting in the MPC in August. As in July, one member (Blanchflower) continued to believe that the inflation risk was transitory and the output risks justified a rate cut; while another (Besely) voted for a rate rise.

Sympathy for central bankers may be a rare feeling, but I do quite understand why all the other members ducked under the table and left rates well alone - again.

Given the uncertainties expressed by deputy governor Charles Bean at the central bankers' jamboree in Jackson Hole, the risk of a rate rise may be receding. If inflation risks further recede, then perhaps others will join Blanchflower's camp and we can see a rate cut or two before the year's end.

Positive developments elsewhere in the global economy would be welcome. Again, decisions on monetary policy will be critical. In the US the Fed looks to be willing to ride the inflation risk and keep key interest rates low for as long as possible.

For the next few months US attention will be diverted to the presidential election, so the Fed may be permitted breathing space to wait and watch.

Meanwhile, at the European Central Bank, the hawks have been holding sway and have already pushed through one rate hike, despite a raft of negative data and surveys. This reflects the continuing influence of the stern approach that prevailed at the Bundesbank in pre-euro days. It was said then that not all Germans believed in God but all believed in the Bundesbank.

The ECB has to set rates for the whole of the eurozone and what suits one part of that area may not be best for other nations.

The stresses and strains are evident. The latest data suggest that the German economy has slowed sharply and that recession beckons there as well.

That could influence the balance of power at the ECB.

Signals from President Trichet et al are still placing the emphasis on inflation risks, but a change soon to a more accommodating attitude is feasible.

If we avoid any further financial sector shock, if oil prices keep going down, if wage inflation remains subdued, and if the MPC and other key central banks are brave enough to ponder rate cuts rather than hikes, then 2009 could signal a slow recovery from the recession that lies ahead.

That is about the best outcome that we can expect. Jeremy Peat is director, the David Hume Institute