WE do wonder what is going to happen as the credit crunch starts to bite. We have already seen claims that Foreigners are taking our jobs'."

So says Julie Spence, Chief Constable of Cambridgeshire.

Mrs Spence added that the Government figures for the number of immigrants are "poor" and cannot be trusted. She described the Migrant Impact Forum - the Government's advisory body - as a mere "talking shop" and warned: "They need to get their act together because there has been a rapid change in the pattern and numbers of immigrants, but no real response from government apart from a pat on the head." The Chief Constable believes that Britain is on the brink of ethnic violence.

This crisis has arisen because, ever since Enoch Powell's controversial so-called "rivers of blood"

speech in 1968, immigration has been taboo. No one in government or public life will discuss it for fear of being condemned as a racist. But, as Mrs Spence has pointed out, the financial downturn makes discussion of immigration our most urgent priority. A nation which ignores plain facts is heading for disaster. Our squeamishness in talking about racial issues produces some absurd results. For example, why is it acceptable to say that generally black men make better Olympic sprinters than white men (true), but unacceptable to say that the large number of young black men convicted of theft and muggings is disproportionate (also true)?

The immigration problem now combines with our financial problems to create a huge and imminent threat to race relations in Britain. We need accurate figures as to the number of immigrants and we also need to get to grips with the credit crunch and avoid a slump which would put millions out of work and make racial tensions worse.

I have said before in this column that the Government's preferred solution to the financial downturn is a policy of short-termism, an attempted quick fix which will cause a lot more trouble later on. The quick fix of baling out banks such as Northern Rock, pouring billions into the economy - in effect printing money - and cutting interest rates will be disastrous in the long run.

Quite simply, there is far too much public and private debt.

Do we learn nothing from history? We have been through this crisis before. In 1973 when the oil price quadrupled, Prime Minister Ted Heath displayed financial irresponsibility on the grand scale. He saturated the economy with money, which consequently lost its value through inflation.

He actually introduced inflation-indexed wage rises. I remember it well. I was a schoolteacher at the time and my wage went up every month for a year. Inflation reached 26 per cent and we were on our way to the German hyperinflation of the 1930s when people took their wages home in wheelbarrows.

Governments can pour cash into the economy, bail out failing firms and borrow insanely - for a time. But eventually there comes the inevitable reckoning - as it did after Heath's monstrous mismanagement.

This reckoning caused the massive rise in unemployment of the late 1970s and early 80s. We are heedlessly heading for something similar.

And not just similar but much worse because, as Julie Spence has bravely pointed out, our financial crisis is compounded by our Government's evasion of the immigration issue.

* Peter Mullen is Rector of St Michael's, Cornhill, in the City of London, and Chaplain to the Stock Exchange.