Sean O'Grady: So much for the fabled 'big choice'

We could easily have a 1930s-style National Government to overcome the crisis

The economy, we're told, will be the big issue in this election. Well, it will, but not in the way it ought to be. There'll be lots about personalities, and what the Tories do about the fact that George Osborne is a less popular choice for No 11 among the voters and the City than either of his formal rivals or, even more galling, than the last Tory Chancellor, Ken Clarke, who will be 70 on 2 July, a testament to the benefits of late nights at Ronnie Scott's, real ale and big cigars.

Beyond that, there is little to get excited about. There is what Tony Benn would have called a sort of establishment view now, that the state's borrowing is too big and it needs to be brought down. The IMF says so, as does the European Commission, the Bank of England, the City, and all the parties.

Labour say they'll cut the structural deficit – the bit to do with past overspending – by two thirds during the next parliament, the Tories say they'll get rid of "the bulk" of it by then, and the Liberal Democrats want much the same, though they are more willing to allow for economic conditions.

The truth is that, behind all the interchangeable rhetoric about opportunity, fairness and hope – and who doesn't believe in those? – all the parties agree to within a few billion pounds what needs to be done to fix the public finances. So prepare yourself for a month of insults, leaks, gaffes, and synthetic outrage, when – as far as taxing us, spending our money and borrowing on our behalf goes – the parties are close together.

Indeed, the difference between the main parties can be stated with some precision: £8bn. That's the number the Institute for Fiscal Studies puts on the difference between the Government's and the Conservatives' plans to reduce annual borrowing. In the context of £163bn of borrowing this year, and £704bn in public spending, it is – to use the technical economic term – peanuts. An increase in VAT to 19 per cent, say, or trimming a little more "waste" in departmental budgets, would be all that is needed to push Alistair Darling, George Osborne and Vince Cable into marital bliss. A competent permanent secretary could probably find £8bn by rounding a few numbers in the official accounts – a morning's work.

Now the three parties do have slightly different priorities for cuts – and those are worth talking about. However, none will say that much about what those priorities are. Cable is the most forthcoming on the detail, but even he cheerfully admits (or as close to cheerful as Vince can manage) that he is still £14bn or so short of his targets when it comes to naming specific spending projects that will be axed or trimmed.

Even when it comes to what is known about the detail of spending cuts, the differences can be overstated; all three parties are committed to raising overseas aid to the UN target of 0.7 per cent of national income by 2013; they mostly say they'll try to protect frontline services, whatever that means, and the rest is more or less up for grabs. The public can assume that all parties at all times wish to end waste, and that all parties at all times rarely achieve it.

Place that against the war of words. Cameron accuses Brown of wanting to pile on "more debt and more taxes and more waste", but a Tory government would also be borrowing historically unprecedented sums, would have to retain most of Labour's tax rises, and would also find itself presiding over waste, an ineradicable part of life. It's true that the Tories would cancel Labour's national insurance increase, but they would have to find the funds elsewhere; reducing waste will not yield the fabulous sums expected of it.

So we know what the future holds. If you work in a public library, in a local authority environmental health department, in a further education college or anywhere in Whitehall – away from the "front line" in schools or hospitals in other words – you may well already have felt the axe. Labour is already cutting, despite all the talk about "investment". Coldly but calmly, Darling, Cable and Osborne all agreed during their Channel 4 televised discussion last week that the cuts they plan will be deeper than anything Margaret Thatcher achieved in the 1980s. They were telling the truth.

What the election ought to be about is how to rebalance the economy from its dependence on housing, finance and consumption, towards manufacturing, exporting and investing. To be fair, all the parties agree on that too, but they are even sketchier on how they would bring about such a momentous shift. That's because they don't know how to do it. They don't know how British manufacturing can suddenly become competitive against India and China, let alone those low-cost nations in the eastern reaches of the European Union. They do not know whether the modest state intervention all agree on is actually enough to trigger an industrial revival, but the assumption must be that it won't be. Nor do they know how to make the banks lend more to business, if the Government simultaneously wants to take the banks' subsidised funding away over the next couple of years.

On the wider economy, then, there is the absolute agreement that the parties don't know what to do. If you get the chance, ask your local candidate what happens if, as is happening now, all the major economies deflate at once. Or how we stop ourselves borrowing money from the Chinese to buy their imports. George Osborne, to be fair, identified that as a central part of the problem in the TV debate – but had no answer to it. Let me know what your prospective parliamentary candidates tell you.

If it were not such an outlandish notion, we could easily have a 1930s-style National Government for a couple of years, a "grand coalition" as the Germans call it, to overcome the crisis. More likely will be a Lib-Lab coalition with Vince Cable installed in No 11. As the most credible man with the most credible plan he'd be the best choice. But is that what this election is about?

s.ogrady@independent.co.uk