The ONS published figures earlier this week that showed that deficit reduction had gone into reverse. With borrowing in the first six months (Apr-Sep) of this financial year up £5.4 billion - and in the latest figures for September, government borrowing was up £1.6 billion from last year to £11.8 billion.
These figures make it highly unlikely that Osborne will meet the OBR's forecast (and his own target) of an annual deficit reduction of £12 billion. The BBC's economics editor Robert Peston's verdict was:
Half way through year, gov borrowed £58bn, versus official OBR deficit for full year of £86.6bn. Miracle needed to meet targetEstimates from establishment forecasters think this government will miss this year's deficit reduction target by £10 billion to £15 billion - the latter figure representing a small increase on the deficit from 2013/14.
— Robert Peston (@Peston) October 21, 2014
So not only is David Cameron wrong when he said "we are paying down the country's debts", he would also currently be wrong to say the government is even closing the deficit (the gap that causes the debt to increase). And while in 2010 Osborne said the UK's debts would be 67.4% of GDP in 2015, it now looks like they will be over 80%.
For all Osborne's crowing about the belated arrival of growth - which increasingly looks unsustainable - the reality is that since the beginning of the crisis, the UK has had the worst recovery per person (per capita in economist-speak) of any G10 nation - as this chart shows (h/t Reuters' Jamie McGeever):
In fact, the average UK person has done worse in the last seven years than the average citizen in the Eurozone - for all the UK media's lamenting of our European neighbours and recent jubilation about Osborne's recovery.
However, Labour will fail to capitalise on this failure - because by tying itself to the austerity bandwagon, its fortunes are now intertwined with those of Osborne. If Osborne fails, it just means even more austerity, because Labour agrees with the Conservatives (and Lib Dems) that there is no other solution.
It has abandoned any attempt at constructing an alternative vision of how to close the deficit. Even its woefully deficient, but still critical "too far, too fast" narrative of 2010/11 has been jettisoned in favour of "we will match Coalition spending plans in 2015-16" - a year of re-intensified austerity (as we analysed in July).
So contorted is Labour's position that it's new "we will balance the books in a fairer way" line includes the boast about cutting child benefit in real terms. How is that fair? Of course, with the deficit worse than when they decided attacking children was fair game, they will now have to come up with more similarly 'fairer' cuts.
For Labour this is electorally problematic - the more the party demotivates its own activists and supporters with attacks on things like child benefit, winter fuel allowance and who knows what to come, the more likely it is to lose the next election.
Labour has a choice to make: in the face of a slowing economy and worsening public finances it must either ramp up its austerity to match the other parties (and maintain the 'fiscal credibility' that comes from imposing failing austerity policies), or it must break with austerity and set out a different vision.
If Labour's members, affiliated trade unions and supporters want rid of a Tory-led government, then all efforts must be redoubled on breaking the party from disastrous austerity.