Are we sliding into a black hole? Are we about to return to the days of crisis measures, emergency spending cuts in mini-budgets and the like?

To listen to some of the commentators, you might think so. The chancellor has come in for criticism over his brave pronouncements that he can afford all the spending he has promised. With the economy slowing next year, are the best laid plans about to be knocked into oblivion?

Budget calculator

There's a good way to answer questions like this: obtain an old an envelope, turn it on to its back, and perform some perfunctory calculations on it to see the results. In the case of the public finances, this method yields a pretty clear answer to the question as to whether we're about to enter a crisis: No.

The public finances will be far worse than the chancellor had thought, even as recently as June. But they will not be sufficiently bad for anyone to have to worry much about them.

The chancellor's fiscal rules, his worthy resolutions of good behaviour, are more flexible than people have assumed. They can survive a sharp downturn.

Here are the bare facts; you can reproduce them for yourself on an old envelope if you have one to hand.

'Current balance' key

The chancellor's main fiscal target is the 'current balance'; this is a measure of borrowing, and it represents the difference between day to day income and day to day spending. The current balance ignores investment (any borrowing to finance investment simply doesn't count). The chancellor's goal is for the current balance to equal zero over the economic cycle.

In his latest forecast, the chancellor said the economy would grow at about 2% a year for the next few years and the current balance would yield an average £7bn surplus over the next three years.

Now look at what happens if the economy grows badly. A 1% error in the economic forecast is simply an error of £8bn in the size of the economy. If the economy is £8bn smaller than the chancellor says, the government is about £4bn worse off than it thought.

No catastrophe

So, suppose the economy didn't grow next year at all, but proceeded to grow at 2% thereafter, then the economy would be 2% smaller than predicted. The surplus would evaporate. That would hardly be a catastrophe.

Suppose the economy takes an even worse turn than that. Suppose it shrinks by 1% next year, grows by nothing the year after, and then grows by 1% in the year after that. In the final year of this nightmare scenario, it would be 6% smaller than anticipated. The finances would be £24bn worse in the last year than anticipated. There would be deficit of about £17bn.

This might look disturbing, but in this scenario the economy would clearly be in the low end of the cycle, and under Mr Brown's fiscal rule, he only has to make everything match over the whole cycle.

Borrowing requirement

Even if you forget the rule, and just look at the old public sector borrowing requirement (PBSR), now renamed and downgraded - the main fiscal measure under the last government - the nightmare scenario yields a peak PSBR of about £30bn. That compares to something like £50bn in the last recession. We are hardly going to have to fly the IMF in to bail us out.

In short, we only need worry if we think the economy is permanently changing down a gear, and thus slowing for good. That seems unlikely at the moment, although of course it cannot be ruled out. If it is true, then of course we need to worry about lots of things, not just the public finances.

We might also worry if we think the Treasury has got its tax forecasts wrong. If the economy grows at the requisite speed, but for some reason coughs up very little in the way of tax revenue, the government will be in trouble. Again, there is no reason to worry about that yet.