Is the British economy, five years after the credit crunch of 2008, in the middle of a "lost decade"? That was the question posed by Ed Miliband, the Labour leader, in a meet- the-people session in Birmingham yesterday. Posed, but not really answered. This is certainly the longest recovery from recession since Victorian times – although there are positive features, notably the jobs market. Unemployment has not been as bad as it was in the 1980s, let alone in the 1930s. Since the election, job losses in the public sector have been more than offset by new jobs in the private sector, even though the GDP figures have been more or less flat.
The "lost decade" is a vivid phrase, albeit one first used by Ed Balls, the Shadow Chancellor, in September 2011, when he warned of "a lost decade of economic stagnation". But what is the point of it? Does Labour mean that the UK faces the kind of stagnation suffered by Japan after its banking crisis in 1990? In which case, it is more than a decade since the phrase applied to Japan, which has now had 23 years of close to zero growth. Or does Mr Miliband mean that the British economy should have recovered more ground by now and would have done so had Labour been the largest party after the 2010 election? Those are two very different readings of the country's economic situation.
But our situation is not like Japan's. The national debt of Japan is more than twice its national income. Even the worsening forecast presented by George Osborne, the Chancellor, in the Budget last week was that the UK national debt would peak at 85 per cent of income in 2017.
Britain is in a recovery phase that has been held back by the crisis in the eurozone, which is the market for 40 per cent of our exports. On top of that, one of our main exports, financial services, is restructuring and will not for many years, if ever, get back to the over-heated money-go-round it was before 2007. Furthermore, North Sea oil output is contracting, taking 0.5 percentage points off national income each year. And finally, tax rises and spending cuts intended to restore the public finances have themselves helped to suppress growth. Recently, the independent Office for Budget Responsibility admitted that this effect might be greater than it had predicted.
Hence Mr Miliband's expression of confidence in Mr Balls in an interview yesterday: "He called it right on the economy." The Shadow Chancellor made the case for higher borrowing in the short term to maintain demand and therefore growth. The Independent on Sunday agreed with him, but we can never be sure that he, and we, were right, because we cannot know what would have happened in an alternate universe. Also, more importantly, this fails to tell us what Labour would do if it won the election in 2015.
By then, the case for borrowing more will be weaker, partly because the Government will already have borrowed so much more than it expected. Mr Miliband acknowledges that by refusing to commit the Labour Party to any change in the fiscal stance beyond what it would have done in last week's Budget.
That is prudent politics, especially as the crisis in Cyprus is a warning that the eurozone might pull our economy still further back. But it opens up a dangerous rhetoric gap between Mr Miliband's promise that Labour save us from a "lost decade" and the reality that there is little that any politician can do to change the economy's rate of growth in a single Parliament.