There is little cheer to be expected from the Chancellor's autumn statement tomorrow. Even with the economy no longer technically in recession, the outlook is gloomy and confidence among both business and consumers remains in the doldrums. Against a background of squeezed tax revenues and stagnant growth, George Osborne is all-but certain to concede that both of his all-important fiscal targets are now in question.
The details depend on updated forecasts to be published by the Office for Budget Responsibility alongside the mini-Budget. But more pain, for longer, is set to be the central message. Indeed, the Chancellor himself prepared the ground with Sunday's acknowledgement that it is "taking longer… than one would have hoped". In all likelihood, that means yet another year of public spending cuts – stretching the austerity programme out to 2018 – and a debt stockpile that does not start being paid down until 2017.
The Chancellor has limited room for manoeuvre. His opponents are already crying vindication and re-doubling their calls for a debt-funded plan B. Now there are even predictions that re-jigging the fiscal targets will put paid to Britain's triple-A credit rating, the very outcome that his cuts strategy was supposed to avoid. Notwithstanding the furore, Mr Osborne must hold his course. His central assessment that Britain's public finances are unsustainably under water is still the correct one. His claim that the slump back into recession is more the fault of the euro crisis than the Government's cuts also merits a hearing. And it remains to be seen whether the recent improvements in the economy's performance – slight as they may be – can be sustained.
To adjure the Chancellor to stick to his guns, however, is not necessarily to applaud his progress to date. Far from it. While his fiscal targets may be radical, Mr Osborne himself has been far from courageous.
Much of the focus tomorrow will be on the extra tax rises and spending cuts needed to fill the widening hole in the Treasury's finances. After the political disaster that was his axing of the 50p tax rate in his March Budget, the Chancellor is desperate to prove that we really are "all in it together". It is regrettable, then, that Liberal Democrat calls for a wealth tax levied on high-end properties has been ruled out. The reduction of the tax-free allowance for pension contributions slated instead is not unwelcome, but it is a feeble second-best. Similarly, while some kind of freeze on benefits payments is unavoidable if the Government is to take any sizeable chunk out of spending, Mr Osborne should also be calling time on the universal benefits for the elderly which see wealthy pensioners receiving free bus passes and winter fuel allowances.
But tax and spending is only half of the equation. No amount of austerity can hope to balance Britain's books in the absence of economic growth. It can only be hoped, then, that tomorrow's mini-Budget will contain more than the rag-bag of tweaks, tinkerings and half-measures that have characterised the Government's growth plans so far.
In fairness, there are no easy answers. Tax breaks to encourage wary but cash-rich companies to invest would be a good start. So too would expediting plans for a state-backed business bank to help improve the flow of much-needed credit. Top of the list, however, is infrastructure investment. Thus far, the Government has talked big but delivered little, making much of long-planned public works and struggling to convince private sector backers to invest, even with state guarantees. With the case for his fiscal strategy ever more difficult to make, it is time for the Chancellor to be bold.