Steve Richards: The lack of sustained growth remains the overwhelming issue

Thoughtfully George Osborne leaked his big political message in advance. After the US presidential election he noted in an article that Barack Obama prevailed with one specific message: "Although times are tough, progress is being made. It's a hard road but the country is on the right track". Osborne repeated that message at the beginning, middle and end of his statement yesterday. He will be doing so many times up until the next general election.

He will repeat the metaphor with scrappy or no ammunition. He has far fewer grenades than his Tory predecessors in the 1980s or his heroes from Canada in the 1990s. After the last election the new Chancellor declared with a flourish he would wipe out the structural deficit within a single parliament.

That objective was lost a year ago. Now the Chancellor admits his austerity drive will extend well into the next parliament as other previously declared goals move further into the distance. Once again Osborne blamed the eurozone, the wider global economy, along with a convenient new discovery that the crisis in 2008 was even worse than he had thought, which is quite something as he was comparing the UK to Greece between 2008 and 2010, after which he was supposed to come to the rescue. The irony is that Osborne is correct in asserting there are few buoyant markets in the world ready to drive a recovery here, which makes it so perverse that at the beginning he turned off the engine of government activity, the only driver of growth at the time.

Extensive capital spending is one route back towards growth, as the Chancellor almost acknowledges. When unveiling his first self- proclaimed "emergency spending review" Osborne declared he remained strongly in favour of more capital spending. A closer examination of the figures showed then that capital spending was being cut. Yesterday he claimed there would be a switch from current spending to capital expenditure. There is no question that he is right to make such a transfer of funds. There is a very big question about whether the much-needed infrastructure and building projects will be extensive enough and will get underway with the required urgent speed, or in some cases whether they will get underway at all.

In confronting the gloomy figures Osborne has reinforced his reputation as being similar to Gordon Brown in one respect, deciding on an argument and marshalling the figures to support it. At times he sounded like he was Mo Farah, sprinting from one triumph to the next, but Osborne makes his moves in a far gloomier economic context than Brown.

As the head of the Office for Budget responsibility Robert Chote put it politely: "The Government's goals have become more stretching … there will be an extension of the pain." There is a lot of grim extending and stretching in this cold winter; less Mo than a yoga class going badly wrong.

So far the Liberal Democrats have been the main electoral victims of the painful contortions. Their pain will almost certainly stretch too. In the early autumn Nick Clegg proclaimed vaguely the virtues of a wealth tax. He has not got one, nor a mansion tax. Instead he and his party are left defending sweeping welfare cuts without much of a protective shield, although they get more low earners exempt from income tax. The various additional anti-tax avoidance schemes are easy to announce. Every chancellor does so twice a year. Even in the unlikely event of some of them being effective they are not as daring or as guaranteed to raise some money as a mansion tax. And all such initiatives provide tiny crumbs compared with the sums raised when an economy is growing. The lack of sustained growth remains the overwhelming issue.

The Shadow Chancellor, Ed Balls, is in the opposite position to Osborne. The Chancellor can spell out 10 election winning themes before breakfast but lacks a successful economic policy to back them up. Balls has been entirely vindicated in his early assessments of what would happen under Osborne's policies and yet lacks accessible and populist themes to reinforce his astute judgement.

The vindication of his early warnings should make him more, rather than less, worried that he struggled to make a case in the Commons yesterday and more widely with the electorate. Balls tends to rely on his deeply-felt attachment to Keynes and a more immediate five point plan, without populist phrases to frame an argument.

Sometimes he makes no wider argument at all, as he did so brilliantly in his famous Bloomberg lecture in August 2010 when he warned of the consequences arising from cutting too fast and deep. He and Ed Miliband still need to spell out more clearly where they stand on "tax and spend" why that has changed from where they stood in 2010 and what the implications are for their approach to the 2015 election.

Their complex and daunting task is made slightly easier when facing a Chancellor who can only hope he has better ammunition when he claims to be on the right track as the next election moves into view.