With most economists now forecasting that Britain will officially re-enter recession in Q1 2012, the Chancellor will be under immense pressure by the time of the Budget on 21st March to at least be seen to be doing ‘something’ about the economy.

This would seem an opportune moment for him to announce that the Government is going to revisit it’s spending plans, in the light of events, and there will be a Spending Review, or a review of the Spending Review, or something, to report in October 2012. The political advantages of getting a ‘breathing space’ during which the Government can say “look, we’re not inflexible and we are doing something” would seem obvious. Of course, he could even make the breathing space bigger by saying it would be SR2013, to be announced in June or July 2013?

It was always somewhat bizarre that a Government formed of parties who had regularly decried Gordon Brown’s “stalinist” system of Spending Reviews and 3-year plans should not only adopt the system but extend it into a rigid 4-year Spending Plan. And it was always a somewhat weird idea that a Government could actually stick to a 4-year plan in what was always going to be a period of economic and financial turbulence, one way or another. I did suggest back in October 2010, when the last one was announced, that a 2012 Spending Review was distinctly possible.

So, I don’t know if this is what is going to happen, but if George Osborne comes out with a ‘rabbit out of the hat’ something like this on 21st March I wouldn’t be at all surprised. I wouldn’t mind betting it is at least being discussed inside HM Treasury.