The Chancellor has just embarked on a huge spending spree in infrastructure investments. His argument being this is possible because interest rates are at historically low levels. Of course this has been the case for the past ten years. Since March 2009 the Bank of England’s base rate has been at or below 0.5%, with one period at 0.75% starting in August 2018 through to when the rate was cut to 0.25% yesterday.

This compares with rates which back in July 1998 were set at 7.5%. This rate drifted down over the subsequent years to 3.5% in July 2003, then slowly rising to 5.75% in 2007.

So for the whole period of the conservative government rates have been historically low. When inflation is taken into account the cost of borrowing for government has been pretty close to and at some points below zero, as it has in many other Western economies.

Over the period of Austerity many economists argued that borrowing to fund investment in infrastructure following the financial crash of 2008 would be a sensible. Counter cyclical investment of this sort would create new, real assets and not simply inflate the values of existing ones which the whole process of quantitative easing did.

But no, we were told this was not sensible. The public finance had to be put in order and the size of the state reduced to what we could afford. This refrain was repeated up to the last election where the Labour Party’s proposals were dismissed as the old “tax and spend” model lacking a prudent approach to public finances and debt.

Well, blow me, it’s suddenly ok. I don’t pretend to understand economics but I do bull***t.

However we should not be churlish but rather rejoice when a sinner sees the light. With all the zeal of a convert the government have gone beyond “tax and spend” to “spend and spend “. Not just announcing huge increases in borrowing but also increases in revenue expenditure, “whatever it takes” to support the NHS through the Covid-19. Further, they have announced a series of tax reductions to support business.

This is all, genuinely commendable. The real test of this government however will come when the impact of Covid-19 and subsequent exit from one of the three largest trading blocks in the world start impacting on the real economy. Recession is a real possibility and then tax receipts will fall like a stone. How they choose to balance the books then will be a genuine test of their commitment to “levelling up” the economy.