The slog ahead has become longer. We live in a world where the mathematics of public finances dominate everything and the scope for politicians to do anything other than cut their deficits is just about zero.
And so it was with George Osborne yesterday. He could put a brave face on it, celebrating that the UK has such credibility it can borrow as cheaply as Germany.
He could trot out a string of infrastructure projects designed to give a spur to growth.
But the reality is that the growth numbers are materially worse than they were in March and our national debt will peak at least a year later and close to £150bn higher than previously expected.
We learnt two things yesterday and had two bits of course correction in response. The first was that the economy will flirt with recession through winter. We pretty much knew that, but having it confirmed at least clarifies things.
The second follows on. Because the recovery is running a year later than expected, the correction of the budget deficit has been rolled back a year too.
In response the Chancellor has accepted this slower than expected correction. You could say it is still Plan A rather than Plan B, but it is Plan A done a lot more slowly.
Secondly, there has been a modest switch from current spending to spending on infrastructure. In the total scheme of things the switch is tiny: £1bn to £1.5bn a year amid total spending of £650bn a year. But if it pulls in more funds from the private sector and overseas investors, it may help a bit.
It was a mark of the tight spot in which Mr Osborne finds himself that he should bang on about the huge boost to the country's infrastructure when all he was doing was to switch less than 0.5 per cent of public spending from one pot to another. As for the rest – holding down fuel prices, further curbs on public sector pay, an additional hit to the banks and pension funds – all this may in political terms matter, but in economic and financial terms it is detail. The harsh mathematics of how much tax is coming in and how much he can safely borrow dictate everything.
So what will really matter? One is retaining the trust of global savers. A criticism made by Ed Balls was that the Government was "offering more of the same".
He is right of course. But that is all governments can do. Look around Europe. There is no alternative to balancing the budget; governments that fail to do so are punished with the full ferocity of financial markets in a funk.
At least five governments in Europe have fallen as a result of market pressure. So far the coalition has managed to retain trust despite Britain's weak financial position and the further deterioration we heard about yesterday.
The other thing that will matter is luck. The coalition has been unlucky because our trudge back to solvency has been slowed first by the headwinds of high energy and now by the troubles in Europe.
We cannot assume our luck will turn. The situation in Europe may become very nasty. But luck does even out over time and we have bought ourselves time.
We could probably slow the pace towards a balanced budget even further if that were clearly the result of things beyond our control. Let's hope we don't have to.Reuse content