The crisis now threatening the British economy is a chronic and widespread lack of growth. The blame for that lies firmly at the door of the party of austerity
George Osborne and David Cameron made little effort to hide their discomfort at last week's news that the economy had slipped back into recession. Their carefully conceived political arc – take the pain, restore growth, sail serenely back to power – has been shattered.
Analysts embarrassed by getting their forecasts wrong rubbished the official estimate that GDP declined by 0.2% in the first quarter. But a couple of tenths of a percentage point either way would make no difference to the big picture, which is of an economy flat on its back. Output is lower than it was in the third quarter of 2010.
Osborne's central economic gambit – that, by cutting business tax and regulation and convincing the markets he was serious about tackling the deficit, he would clear the way for growth – has failed miserably.
And perhaps it's no coincidence that just as his economic strategy is so publicly collapsing, the chancellor's deft touch for political strategy appears to have deserted him. The backlash against March's budget has been the most painful and drawn out since Gordon Brown used his last outing with the red box to abolish the 10p tax rate for low earners, leaving a ticking time bomb for Alistair Darling.
Osborne isn't being helped either by the fact that the intellectual and political tide across much of Europe seems to be running against him. François Hollande's strong showing in the first round of the French presidential election underlines the fact that voters are no longer willing to submit unquestioningly to the markets' demand for austerity. Meanwhile, the surprise collapse of the Dutch government – one of the most hardline in calling for budgetary discipline elsewhere – reveals how concerned politicians of many hues are becoming about the social costs of Europe's draconian "fiscal compact".
But for the chancellor to protest that he has made the UK a "safe haven" from the euro storm – effectively, that it's only thanks to him we're not Greece – is a cheap get-out. Unlike the single currency's hapless members, the UK has its own central bank and its own currency. That has allowed the pound to fall sharply against the euro and the dollar since the onset of the crisis (though it has appreciated in recent months), and the Bank of England to slash interest rates to 0.5% and pump £325bn into the economy.
A more instructive comparison is the one Ed Balls has gleefully been making for the past 12 months – with the performance of the US.
Admittedly, America's failure to make inroads into its debt has been as much a product of political paralysis in Washington as a thought-through strategy. But over the past three years, President Obama has been unabashed about keeping the spending taps open, and it seems to have paid off. Despite being downgraded by Standard & Poor's, and suffering a far worse housing crash than the UK, the US has returned to growth. While GDP in the UK remains more than 4% below its pre-crisis peak, in the US it's more than 1% higher.
Of course, there are other secrets to US success: it has a more diversified economy than the UK, where "business and financial services" – the City, plus our armies of accountants, lawyers and consultants – make up 29% of GDP, against less than 20% in the US.
But America is wrestling with many of the same structural difficulties as the UK, such as over-leveraged consumers and banks. So fiscal stimulus may not be the whole answer, but there does seem to be a prima facie case that it helps. As Trevor Greetham of Fidelity says, when comparing the two countries' fortunes, "growing your way out of debt looks like the better strategy".
Ben Bernanke, the chairman of the Federal Reserve, certainly thinks so. Warning at his press conference last week about the risk to the economy from what has become known as the "fiscal cliff" in 2013 – when a series of tax allowances runs out at the same time as savage automatic spending cuts kick in – he said that the Fed, which has been aggressive in propping up growth, would be powerless to help.
"There is absolutely no chance that the Federal Reserve would be able to have the ability whatsoever to offset that effect on the economy," he said. As Sir Mervyn King and his colleagues have discovered, central banks can only do so much when the government is sucking demand out of the economy.
However, the fact that Osborne's slash and burn approach delivered a knockout blow to an economy that was struggling to get to its feet doesn't mean that a shot of public money will bring Britain back to fighting strength.
Most of the sources of growth that powered the expansion of the past 20 years – consumer credit, property, finance, public services – are in retreat and likely to remain so, perhaps for years; while exporters, Osborne's great hope, are facing recession and austerity in major markets across the Channel.
As Tim Morgan of City broker Tullett Prebon put it in an apocalyptic note last week, "a substantial majority of the economy has become ex-growth". It's becoming an increasingly widely held view, in the City and beyond, that without radical action the UK now faces a prolonged period of stagnation.
Even within his spending plan, Osborne could have thought urgently about easing the squeeze on hard-pressed families, funding infrastructure projects that would create jobs and boost productive capacity, and channelling investment to firms still starved of the funds to expand. Instead, his priority was to deliver a tax cut to some of the highest earners in the country.
For the past two years, the coalition has whined about being left to clear up "Labour's mess". But as the economy bumps along the bottom, it's time for Osborne to man up and shoulder his share of the blame.