The full failure of the Chancellor's publicly stated economic strategy has been exposed.
The deficit has grown, a fact partially concealed only by one of the accounting tricks in which the coalition seems to specialise.
Debt has grown, to the point where its reduction has now been dropped as an economic target.
The contradictions at the heart of austerity policies have been cruelly revealed.
George Osborne gambled that cutting public spending and passing the costs of the economic crisis onto working people would free businesses to invest and export our way out of recession, but the co-ordinated austerity offensive being waged by eurozone governments has led to a collapse in demand in one of Britain's biggest markets. Similarly, in spite of bailouts and moral exhortations, the financial sector has failed to free up lending.
Paralysed by the persistent mountains of bad debt they sit on, the banks prefer to soak up round after round of quantitative easing, hoard money and focus on recapitalising.
As a consequence, austerity has been revealed, yet again, as a self-defeating strategy that cannot produce growth.
With none of his chosen levers working quite the way they were supposed to, Osborne is left surveying the effects of the cuts to public spending and the failure to invest in infrastructure.
He has destroyed the only other potential source of demand and growth in the economy and as a result, tax receipts are falling and the ratio of debt to GDP is growing to the point where for all his efforts, the ratings agencies may well punish him by removing Britain's AAA rating.
The pitiful gestures toward infrastructure spending can be seen as a belated and muted recognition of the political need to take some action to stimulate growth somewhere in the economy.
The coalition continues to hide behing the myth that their actions in cutting spending are preventing us from facing a southern European-style sovereign debt crisis.
Borrowing is cheap because of the cuts, we are told.
Yet as Jonathan Portes from the National Institute of Economic and Social Research explained to the Treasury select committee recently, gilt yields are low not because the financial markets have confidence in government policies but because of the overall weakness of the British economy and the dim prospects for equity prices.
The threat of a Greece-style debt crisis was never a real one and that cannot explain the government's undiminished commitment to anti-social and anti-growth policies.
So why does the coalition not embark on a more fundamental rethink?
Progressive economists of various shades of Keynesianism insist that Osborne et al are in the grip of ideology, by which they appear to mean error born of adherence to bad ideas in defiance of reality.
This is of course partly true. For the last four years or so, reality has spectacularly failed to conform to the neat formulas generated in the models of a generation of neoliberal economists.
Yet there is more to Osborne's single-minded pursuit of austerity than ideological rigidity.
As has been well documented, the Chancellor and the coalition more generally are beholden to the immensely powerful interests in the City.
The Tories are of course well-funded by hedge funds, investment bankers and private equity funds and supplied with suitably tailored policy documents by their obscurely funded think tanks.
But the Orange Book Liberal Democrats share much the same outlook.
There is a story that needs telling about how finance capital captured the mainstream parties' policy agenda and came to dominate the organs of government and state. When push comes to shove, finance capital in Britain fears the kind of growth model at the heart of the various plan Bs circulating on the broad left.
First, changing course would mean confronting the failure of the financial sector to fulfil its basic strategic function in the economy.
The coalition has effectively sheltered the City from the social and political fallout generated by the 2008 crash. As a result, the immense generosity of the British people in bailing out a failed and dysfunctional banking sector has been repaid with precisely nothing.
Nothing for savers, nothing for small and medium-sized businesses and nothing for the strategically vital fledgling industries of the future.
But in addition to shielding the City, the coalition is also busy feeding it.
The other, largely unstated, objective of austerity has been to act as a cover for the creation of a new set of assets for the City to trade in, using our remaining public services and public revenue streams.
As Laurence Harris and Jerry Coakley argued back in 1992, one of the major objectives of the first wave of sell-offs that privatised nationalised industries, utilities and social housing was the financialisation of public wealth and its transformation into assets that could be owned and traded by City institutions.
As has been well documented by academic Dexter Whitfield, this continued under new Labour.
The banks, private equity funds, hedge funds and other institutional investors did very well out of the "special purpose vehicles" that financed PFI programmes and continued to profit from trading this debt on the secondary markets.
Now, the government's austerity policies function as an ideological cover for a new wave of deregulation, privatisation and outsourcing in favour of the public services industry.
The growth of large companies like A4E, Care UK, G4S, ESG, Capita, which have won major contracts in privatised health and social care, the Work Programme or through the government's deregulation of post-secondary education and training, is fuelled by investment banks and private equity funds.
In addition, the same banks are now lobbying the government to replace the politically unpalatable PFIs with "social impact bonds," allowing them a new way to extract profits from the financing of infrastructure.
The coalition is basically rehashing in new conditions a key plank of the Tory strategy of the 1980s.
In the 1980s, this meant positioning the City at the centre of growing global capital markets through deregulation of the banking sector and the privatisation of housing and nationalised industries and utilities.
In the 21st century, it means shielding the City from the wrath of the electorate with one hand and piling its plate with public assets and revenue streams with the other.
In the 1980s the direct consequence of financial deregulation was to hasten the export of capital and the takeover of British financial institutions by US competitors, making the City of London more than ever an offshore of the US banking system.
Almost a fifth of all US capital invested abroad is now located in Britain and its crown dependencies, the greater part in banking.
Similarly, privatisation in the 1980s had the effect of massively inflating private corporate and household debt, sowing the seeds of the financial crash of 2008 and reinforcing the parasitic nature of the City's relationship with the rest of the economy.
This relationship was strikingly described by the Bank of England's Andy Haldane as "a great sucking sound" as the wider economy and society was starved to feed the growth of the financial bubble.
What a sick irony that the British people are to pay for the creation of this bubble all over again through a new firesale of public assets and wealth aimed at feeding the speculators.
More than ever, the City's interests are not those of the broad mass of the British people.
They are not the interests of British industry, small, medium or even many of the largest, and they are certainly not those of the broad mass of working people in this country.
That's why it's not enough for emboldened Keynesians to expose the folly of the coalition's economic policy and its failure to generate growth.
The City and its government aren't really interested in the growth of Britain's economy as such.
Their strategy seems to be to sweat the British people for a few more assets, restart the great international gamble and hope we won't mind acting once more as the backer of last resort when it all goes wrong.
As the authors of Building An Economy For The People, including myself, have argued, those who want to promote an alternative economic strategy based on restoring national growth and narrowing inequality must actively mobilise a broad social coalition around a popularised case for confronting the political and economic power of the City and its grip over our economy. Otherwise, there really is no alternative.
If you appreciated this article then please consider donating to the Morning Star's Fighting Fund to ensure we can keep developing your paper.