James Moore: Waiting for a soothing balm is, well, barmy

Disaster! Abandon ship. And please, turn out the lights when you leave, you at the back. This was the City's reaction to yesterday's official figures on public borrowing.

In the current, febrile climate, almost any data that comes out on the wrong side of its forecasts is greeted by prophecies of doom.

Yesterday's figures were very much on the wrong side of those forecasts, with the general trend looking awful.

The Office for Budgetary Responsibility expected the Government to lower its deficit by £3bn in the current financial year. That forecast might well have to be revised somewhat – we are currently £6.5bn behind last year's running total.

This has led Ernst & Young's Item Club to predict that ministers will need to find savings of £11bn to hit the forecast.

Perhaps that's why David Cameron has been touting ideas such as throwing anyone under 25 who is finding it tough to get a job right now (which is most of them) a cheap sleeping bag and a sack of Big Issues instead of housing benefit.

See, it isn't just a cynical attempt to sound like a born-again Thatcherite. But kicking sand in the face of a generation that is already on its knees won't stop the overshoot.

It is going to happen, and perhaps Mr Cameron and ministers should just let it.

Long term, Britain's budget deficit has to be tackled.

But the strategy of taking some pain and toughing it out while the global economy provides soothing balm is scarcely tenable any more. That soothing balm has now been replaced by caustic soda from the eurozone.

A sensible government might respond to that by easing the fiscal noose around the economy's neck, albeit with some reassuring words for the markets from the Chancellor about tightening up again when the outlook is happier.

Certain economists would still cry foul and predict all manner of gloomy consequences.

So what's new? If action is not taken soon, the economy may very well confirm their worst fears for them anyway, including those about public borrowing.

Let them squeal, our sensible, pragmatic administration might say. Plan A's not gone away. It'll be back when the economy's back. Such decisiveness would stand in stark contrast to the eurozone's drift into a death spiral.

Unfortunately, the only time the current Government shows any such gumption is when the tabloids kick up a stink about fuel prices. Or when millionaires and their lobbyists argue that being "in it together" must mean tax cuts for them.

Let them squeal, our sensible, pragmatic administration might say. Plan A's not gone away