Though the Liberal Democrats are the smallest of Britain's three main political parties, the days when their pronouncements on the economy could be safely ignored are over. The views of Vince Cable, the party's prescient Treasury spokesman, always demand a hearing.

And the Liberal Democrats have been ahead of the pack in policy terms too. When they proposed tax cuts to revitalise the recession-stricken economy last September few took them seriously. Since then, Barack Obama and Gordon Brown have both discovered the merits of the injecting spending power into the economy.

And now the party could be about to repeat the trick. The Liberal Democrat leader, Nick Clegg, yesterday unveiled his economic team's proposals to raise the income tax threshold to £10,000, cutting the taxes for those on low and middle incomes by £700 a year.

This is as counter-intuitive as the party's tax-cutting strategy of last year. Westminster has been dominated in recent weeks by talk of what austerity measures will be needed in this week's budget to fill the hole in the public finances. Such measures will certainly be necessary. But they might be easier to sell to the electorate if packaged with some shrewd redistribution of the tax burden.

The Liberal Democrats also seem to be ahead of the pack in their suggestions for spending cuts in the longer term to fill the structural deficit in the public finances left by the profound shrinkage of Britain's financial services industry. The Liberal Democrats have identified public sector pensions, the expansion of university intake, "big ticket" military spending and the Child Trust Fund as areas where savings ought to be sought. By contrast, the other parties have barely begun to think about where the axe will need to fall when this immediate crisis is over.

Of course, the Liberal Democrats have more space than Labour or the Conservatives to make radical proposals on taxation and spending. But it has to be said that they have used their relative freedom thoughtfully. They show that there is a place in politics for boldness and original thinking. And who knows: it may even pay significant electoral dividends.