We can't afford to keep spending money on recovery. Also, the Government is a useless banker/ VC.

Poor old Alastair Darling (ahem). He knows better than anyone that the one thing UK plc really needs to get to grips with, now that the worst of the recession is over, is public spending. But he’s a politician and there’s an election on the way. He can’t afford to be seen as the axeman, at least not until after May 6th, and Gordon wouldn’t let him if he tried.

So here’s the line he has tried to walk instead. Yes, we need cuts, but not yet. It’s too soon, the recovery isn’t safe. We need to keep spending, but on recovery rather than rescue. Big government saved you in the dark days of 2008/2009, and it can do the same again this year – just keep the faith. Don’t trust Dave and the posh boys, they’ll turn the taps off straight away and the cure will be worse than the disease.

All well and good in theory, especially for all those pundits who have rediscovered Keynes in recent months. But in practice, we’ve been pouring money into cushioning the recession for 18 months and – however successful or otherwise the outcome – we simply can’t afford to do it any longer. Every day we continue to keep spending now will simply make the final, inevitable day of reckoning more painful.

The fact is the deficit is already bigger than when Denis Healy went to the IMF in the 1970s. That’s simply not sustainable - yet there's little sign in today’s Budget that the Government is ready to do anything serious about it. A green investment bank so we can pour more of our hard-earned tax dollars into the dubious benefits of offshore windfarms. £500m of taxpayers money to be ‘invested’ in start-ups by Whitehall’s finest commercial talent scouts. 15,000 civil servants to be relocated out of London - a great opportunity for Waitrose to open a bigger store in Cardiff but not much good when it comes to protecting sterling, our national credit rating or our international economic reputation.

I’m also wondering about the wisdom of forcing state-owned Lloyds and RBS to massively increase their loans to SMEs. The Treasury wants to double the current figure to £94 billion. There will be plenty of weak and badly-run SMEs at the front of the queue to get access to this money, and default rates will go up accordingly. The government is a useless banker and an even worse venture capitalist. If Lloyds and RBS thought there was more easy money to be made from UK SME lending, it would be already doing it. Irrational exuberance combined with an overly-lax attitude to risk is what got us into this mess in the first place.

What matters at the moment – and it galls me to say this – is what those wretched 'markets' think. If they do not like the look of the remedies offered to what they see as our massive problems, they will punish us. That means potentially losing the AAA-rating, buyers getting sniffy about our bonds, lumping us in with the Greeks and the Portuguese as honorary PIGS. Darling has done his best to set out his stall for the general election and first reactions aren’t good. The pound fell below a dollar fity again as Darling sat down. Whether it will make any difference to the voters we won't know until May, of course.