I'm in Edinburgh talking to 200+ senior businesspeople on what the prospects are for 2011. Well, I think it's going to be a long hard slog. We've been living beyond our means for ten years, private debt is three times what it was twenty years ago, and the government is spending £4 for every £3 it raises in taxation. It's time to sober up.

But spookily, despite the scares of 2007-08, things don't seem too bad. Company failures are at a thirty year low; growth figures have been better than expected; consumer spending has actually grown. The reality, though, is that the whole show is propped up with funny money. And guess who has the monopoly on that?

Falling interest rates helped households last year. But in 2011, wages aren't growing much but inflation is rising significantly. Unemployment could reach 2.7m, boosted a bit by public sector job cuts. Interest rates will rise as inflation becomes a worry and to reassure lenders as the government inevitably starts missing its spending-restraint targets. On all these fronts, consumer spending will be squeezed.

The falling pound should be helping us to flog more exports, but progress to date has disappointed. Our eurozone customers are in turmoil, and the commodities we use and process have become expensive. Not much joy there.

At least we have a stable political background, or we will have once Vince Cable is shuffled out of sight, with the promise of a five-year Parliament and recovery plan. But small businesses, the ones that actually generate jobs, face very tight credit terms, and the government's 'growth agenda' is too weak: we need a major cut in tax and red tape before businesses will risk taking on new people.

Like Pharoah's dream, I figure that for every fat year we have to suffer a thin year. So we probably have about eight thin years to go. That hangover is the price of our previous excess. To get through that long adjustment, businesses should act as if interest rates were sky high and businesses were failing all over the place. After all, it is only because of the tsunami of funny money that they are not.