Image: Gareth Milner Image: Gareth Milner

The Tory party unveiled its manifesto yesterday, and George Osborne must be turning in his political grave.

Yesterday, Mrs May said that that the Conservative government will finally “balance the budget when the cows come home.” At least she might as well have said that.

If you want to be anal about these things, she said that the target date is 2025 – two or three years before Elon Musk says he hopes to begin colonising Mars. Frankly, he has a better chance of hitting his target than the dynamic duo of Mrs May and Mr Hammond have of hitting the 2025 target.

Don’t misunderstand the thrust of this article, austerity always was an idea that came straight out of the economic asylum.

GDP is made up of consumption, investment, exports minus imports, and government spending. If governments cut back on spending at a time when consumers are feeling strapped, and companies are not investing that much, nothing short of an export miracle can stop a period of economic hardship.

One country can get away with austerity in such times, especially if the country is quite small, such as Iceland, but when lots of countries are at it, especially if those countries contain large economies of systemic global importance, then the result is economic hardship.

There is another point. If governments are trying to reduce borrowing, while companies are investing less than the ideal, then the only way the global economy can avoid recession is if consumers borrow more. This is what has happened this decade, the result of austerity was a rise in household debt – it merely had the effect of re-distributing debt, not reducing it.

At a time when a more imaginative use of QE could have funded stimulus without creating inflation.

Does it matter? You might say that the economy has done okay, it is recovering. But the price we pay has been the rise of populism. France’s near death experience with fascism, a new threat from the Far Right in Austria that is just beginning to re-emerge.

Now Philip Hammond has decided to drop austerity, should we not therefore be celebrating?

Maybe we should, but it is important that at times when a government tries to inject stimulus into the economy it does all it can to encourage growth in all other respects.

That is why the plan to cap immigration to the tens of thousands is so dubious.

Sure, it is what the electorate demand, but Mrs May and her colleagues know that immigration is good for the economy – they know that the extra tax it brings in is far greater than what it costs in terms of consumption of government funded services such as welfare.

But good government is meant to lead, persuade, and correct myths.

When a government says it is putting the economy first, and then does something that is most decidedly not in the interest of the economy, in order to garner votes, does that not make it populist?