When is Labour (and the Lib Dems) going to challenge this absurd narrative? Will Hutton's piece in today's Observer is a sustained lament that Osborne's economic analysis is just not being challenged adequately. It should be Miliband's most urgent priority.

We may have to agree to disagree about the pace or extent of debt reduction. But there are two parts of the narrative that Labour should have attacked far more convincingly and the LibDems should never have bought into. Before the sky fell in, the Tories were committed to the same levels of public expenditure (and therefore the same structural deficit) as Labour and wanted less, not more, banking regulation. And would, if in power, probably have felt just as obliged to bail out the banks.

But the mud has been allowed to stick.

It is essential that Labour needs to urgently challenge the Tories and Clegg's erroneous claims that the UK was on the edge of an economic precipice last May, and that the too deep, too fast spending cuts have brought us back from the brink. If this argument is not defeated quickly then all is lost for Miliband and Labour. Ed Balls can't do it alone, a united and concerted fight back is required by all Labour Party representatives on this most important point.

"No one is denying the deficit needs to be tackled, Nick. The argument is about how to go about it."

So why the continual daily criticism of the whole premise of Osborne's policies from the left ?

No one would deny that, say, trying to eliminate the deficit in one year would be "too far, too fast".

The Tory plan is really only marginally deeper and really no slower than Darling's plan and yet the left seems to claim that it is entirely misguided.

Hopefully the Coalition will collapse and we'll have Labour back asap. Osborne knows nothing about economics.

Nick,

The Tories took the UK into the ERM without consulting France and Germany properly and at an exchange rate that they were unprepared to defend.

As I recall, had Kinnock won the 1992 election, chancellor John Smith was set to renegotiate the rate to something more realistic.

Black Wednesday was to a large extent a self-inflicted wound. The financial crisis of 2007-8 was foreseen by very few people, least of all the bankers.

'The Tory plan is really only marginally deeper and really no slower than Darling's plan and yet the left seems to claim that it is entirely misguided.'

Part of the reason for this, Nick, if that Labour repudiated Darling's plan some while ago. It is another misrepresentation peddled by Cameron and Osborne that Darling's plan remains Labour policy. In fairness, the same figures are regularly trotted out by Clegg too - but they are still inaccurate.

The claim (for example, that Labour cuts would only be 2bn less than Tory cuts) ignores these changes that Ed Miliband has made to the Darling plan. Labour would still halve the structural deficit over four years but it would do so through a 60:40 ratio of spending cuts to tax rises, rather than the planned 70:30 split. As a result, the difference between Labour's cuts and the coalition's would be greater than the claimed £2bn this year. The switch to a 60:40 ratio means that total departmental cuts have fallen from £44bn to £34bn, compared to the coalition's cuts of £61bn.

Even if we accept the claim, the coalition's decision to cut spending by £6.2bn in 2010/2011 (when Labour would have made no cuts), means that the true gap between the parties' spending plans is £8.2bn, not £2bn.

Rather like Cameron at PMQs each week, the country is basing its prejudices on a whole host of lies.

In relation to tax avaoidance, read 'Out of sight' and illuminating article by Richard Murphy in the London Review of Books of April 14th of this year. His opening paragraph reads:

'In his budget last month George Osborne announced that if in the future a UK company runs its internal banking arrangements through a tax haven subsidiary it will benefit from a special tax rate of just 5.75 per cent of the resulting profits. The rate is exceptionally low: the same activity undertaken in the UK is taxed at 23 per cent. It is a change that will delight corporate tax avoiders everywhere: the UK will now condone the use of tax havens in locations such as the Cayman Islands, Jersey and the Isle of Man. It is expected that by 2016 more than one sixth of corporation tax will come from such offshore activities.'

Nick, First, UK taxes, if I'm not mistaken, are lower than in many European countries. Second, taxes are too low everywhere in the world. We need less income inequality in the UK and throughout the world, and we need higher taxes and more regulation to accomplish this. What we have right now is a regime of legalised theft and extorsion, profiting banks, cartels, and speculators. It's time for the productive majority to flex its muscles, and get a fair deal.

Clive Wolfe,

Now the price is high (for another few weeks at least) why not sell off the UK gold reserves? It would raise $13.8 billion.

The cost of rescuing the banks was £850 billion but the $13.8 billion would still come in handy.

I take it conservatives are aware 4000 businesses went bust for the first quarter of 2011, a 4% increase on Q4 2010.

'socialist/unionist mismanagment got us into this mess'

LOL - the banks had nothing to do with it of course.....

Presumably the same 'socialist/unionist' mismanagement was responsible for the financial crisis in the US and elsewhere as well?

Extraordinary nonsense.

Clive: if austerity economics leads the global economy to a second massive crash--something many non-socialist economists find likely--then Socialism will very possibly recover its role as a major political force, to the benefit of all. Given your values, I'd advise you to get Keynesian before it's too late. That's your best hope!

debt will start to get seriously expensive when we start to see some major defaults (this will surely happen) and rates will shoot up.

the UK enjoyed bouyant tax revenues from booming finance and property sectors, this is when we should have ran a budget surplus according to gordons golden rules - we all know this did not happen.

the US fed is technically bankrupt too - so expect gold to rise further, the chinese don't want to buy western debt anymore - with less buyers out there expect the price of debt to rise - and one more thing we shouldn't expect banks to buy government debt either as the one holding the debt baby will surely suffer.

whatever happens expect the domino effect from government debt exposures to explode western economies. the 2008 crisis was averted with printing money, low interest rates and more debt but we won't have these options next time!

Mike S: yes the banking colapse happened, but if it were not for the 'socialist/unionist mismanagment' we would not be in an almost imposible amount of debt and then we could have re-invested money into the economey - alas there was no money as it had been all spent on public sector workers to try and provide Labour with a core of voters now that the working man has turned away from the fat cat unions

DK: austerity economics is much less likley to lead to a second slump, and would not have been neccessary if not for the hediout waste and mismanagment of the economey in the 'boom years'

Clive Wolfe I see you have fallen for the Tory line. Yaaaawwwnn. It was not socialist/unions mismanagement, how on earth do you work that one out?

Right up until the crash Cameron and Osborne were pledging to match Labour's spending, pound for pound, when Gordon Brown said he wanted more regulation in the financial markets, Cameron jumped in screaming we needed LESS not more regulation, when the banking crisis came, Osborne was like a bunny caught in the headlamps, hadn't a clue what to do about it and Cameron started c screaming that we needed 'more' banking regulation, there is a film of him doing just this. Cameron and Osborne would NOT have bailed the British banks out, they would have let businesses fail, bankruptcies, home repossessions, job losses, pension losses and savings losses. Strange how Osborne's policy had changed when it came to the UK BORROWING £10bn to LOAN (which will never be repaid) to Ireland to bail thier banks out though! Duplicitous or what? Osborne's preferred economy (he said) was the "Celtic tiger" he was off to Eire to listen and learn about how to run an economy. All I can say thank God he was not in power at the time or we will now be with Ireland on the economic scrap heap. Apart from that I would just like to reiterate:

GLOBAL financial Crisis...INTERNATIONAL Banking crisis.GLOBAL financial Crisis...INTERNATIONAL Banking crisis.GLOBAL financial Crisis...INTERNATIONAL Banking crisis.GLOBAL financial Crisis...INTERNATIONAL Banking crisis.GLOBAL financial Crisis...INTERNATIONAL Banking crisis.GLOBAL financial Crisis...INTERNATIONAL Banking crisis.GLOBAL financial Crisis...INTERNATIONAL Banking crisis.