It’s clear that the growth assumptions on which Chancellor George Osborne’s 2010 austerity package had been based were way too optimistic. The budget numbers no longer add up, and there is a risk that British voters will go into the next election with years of falling living standards under their belts, and not much benefit to show for them. The economic and social costs would be very serious. And Mr Osborne could be thinking about a new line of work.
What the economy needs now above all is a shot of entrepreneurial dynamism – a burst of activity from those small and medium-sized companies that are essential to job creation and innovation across the land. That will not come easily at a time when confidence is so low, but making it easier for them to borrow will help. This has to be the objective that shapes Mr Osborne’s policy for the short and medium term.