The Tories are making themselves look foolish because of their apparent lack of understanding of how the economy, if nothing is done, is declining into a slump. There would then be widespread bankruptcies and escalating unemployment. If, on the other hand, the government take action, they cannot wholly prevent these effects, but they can greatly limit them.

There seems to be a Tory hang up over the word "borrowing". High government borrowing won't inevitably be followed by very high government taxes.

What can the government do?

1.Moderate the cuts. Government expediture on unemployment and benefits will rise less.

2. Increase investment. As far as possible this should include import saving invetments as well as infrastructure improvements. Thus unused resources in the building industry could be put to good use.
There should be ways to enable more funds to be available for investment by medium sized businesses.

Overall, we need private consumption to ease off, private savings to go up substantially, and both exports and industrial investment to rise. The financial crisis has caused a sharp loss of confidence, and as personal incomes decline, unemployment goes up, and consumption falls still further. The government has to break this downward spiral. After that, it has to ensure that the economy returns to a stable and even keel.

There should be a balance between the objectives of growth and deficit reduction. It all needs careful and skilful management by the government; but it can be done.