Two years ago, the coalition set out its programme for government. Today, the Prime Minister and Deputy Prime Minister reaffirm their commitment to the central element of that programme - cutting the deficit quickly. This is despite the dismal results this strategy has delivered, despite the fact that even the IMF is arguing that there are more sensible alternatives, and despite the growing realisation in the eurozone that austerity is a dead end.
But, particularly in the light of the Governor of the Bank of England's comment that the government's approach was a "textbook response to the situation", it is worth looking back and considering what the new government's options were and whether there was, in fact, no alternative.
After the election, it was clear that the recession had left a massive hole in the government's finances. Ultimately the books needed to be balanced; spending would have to be cut, and taxes increased. The question was timing: cut the deficit quickly, or wait until growth was reasonably strong again. Both David Cameron and I, from our very different perspectives within government, understood this. But ultimately the decision was the Chancellor's.
Fortunately, he made the right call. And the result was solid, sustained and healthy growth. As he said in his Budget Speech:
"In doing so, I have had to balance two key objectives : first, the essential task of helping recovery; secondly, the need to tackle the deficit so that the recovery will be sustained. I believe that my proposals today strike that right balance. In the year ahead their effect will be broadly neutral, thus allowing the recovery to take hold. However, for subsequent years, as the economy strengthens, my proposals are designed to build in a wedge of steadily rising revenue."
"Some have suggested that there is a choice between dealing with our debts and going for growth. That is a false choice. The crisis in the Eurozone shows that unless we deal with our debts there will be no growth. And these forecasts demonstrate that a credible plan to cut our budget deficit goes hand in hand with a steady and sustained economic recovery, with low inflation and falling unemployment."
If done right, such an approach will ensure fiscal credibility, maintain confidence, and allow businesses and households to plan, without committing the elementary error of reducing demand when the economy needs it most. The 1992-97 Conservative government followed this prescription to the letter - and it worked. Pity about this one.