Judging by the pledges of the Conservative candidates to be elected the next prime minister, austerity is not only over but the era of big spending is back. Contrary to Keynes, who supported public spending during recessions and tax increases during booms to restore the public finances, the leadership candidates are on a roll to outbid each other on tax cuts. With an economy still delicate, a deficit of 1% of GDP and total borrowing at 83% the argument as to whether the finances have been sorted after a decade of austerity remains unresolved. Chancellor Philip Hammond is not sure and has set aside £26bn but this is insurance in case of a no-deal Brexit.

The candidates’ promises are of course illusory, even cynical considering most of the candidates were or are Cabinet ministers and know very well the state of the public finances. If the finances really are buoyant then now is the time to address the legacy of a decade of spending cuts, especially in local government, by restoring investment. But the candidates’ pledges have rattled Treasury officials according to Paul Johnson, director of the Institute for Fiscal Studies, who said they ‘are frightened in a way they haven’t been since the height of the financial crisis’ because of unfunded spending commitments.