When the Conservatives and their Liberal Democrat partners took office, no one could be in any doubt about what they regarded as their central purpose. "This new coalition is founded", George Osborne said, "on an agreement to significantly accelerate the reduction in the deficit". It was, he proudly pointed out, "the very first item on the first page of the coalition agreement". Much was made of the need to secure Britain's credit rating - and when Standard and Poor's affirmed the UK's triple-A status later in 2010, Osborne proclaimed it a "vote of confidence".
But the Chancellor's attempt to eliminate the deficit in one parliament has failed - because if you cut spending and raise taxes too far and too fast, and don't have people in work and businesses succeeding, you can't get your deficit down, because your tax take falls and your benefit bill goes up.
Last month, Moody's switched its outlook on the UK's triple-A rating to "negative", citing concerns over the impact of rapid fiscal tightening on growth prospects. It's debatable whether we should be setting policy according to the dictates of credit-rating agencies who proved such a poor guide in the run-up to the financial crisis and who were quick to call for austerity measures, the consequences of which they now decry. But it was their verdict Osborne wanted to live or die by.
The longer we languish in low gear, the more permanent damage is done to our productive capacity. Around 860,000 people have been out of work for more than a year now - losing hope, motivation and skills - a huge waste in benefits today and in growth potential for the future.
As we approach next month's budget, Liberal Democrats are trying to regain support by reviving their pre-election arguments about fair taxation. But people will take this with a large pinch of salt, given that the Lib Dems put up VAT within weeks of joining the coalition - and are supporting huge cuts to tax credits for working parents.
It's because we want to see the deficit reduced that we are urging the Chancellor to take measures in the Budget to help hard-pressed families, revive business confidence and get people back into work. Even with growth back on track, Labour's approach to deficit reduction would involve tough decisions on spending, tax and pay. We have to be ready to make those tough choices, because we've seen what happens if they are left to Osborne - measures in his autumn statement took three times more from families than the banks, and we know that he'd rather use any spare cash to abolish Labour's 50p rate on incomes above £150,000, than give a boost to middle- and lower-income households.
The big freeze
Labour would make very different choices - repeating the tax on bank bonuses to fund a youth jobs programme, lowering tuition fees for students instead of lowering corporation tax for banks, and doing more to crack down on tax avoidance. And while we think continued pay restraint in the public sector is necessary to minimise job losses, we would freeze pay at the top so we can offer larger increases to those on lower pay.
Times are tough and constraints are tight but we can choose to ensure the heaviest burdens are borne by those with the broadest shoulders, rather than those already struggling to make ends meet. We can choose to support jobs and growth, to help get the deficit down as well as prevent further long-term damage to the next generation, and our country's ability to pay its way in the world.
Those are Labour's values and priorities - and I believe they are also the values and priorities of the British people.
Rachel Reeves is shadow chief secretary to the Treasury