Yes, incredibly, the total cost of servicing our debt will fall to a new historical low of 1.7 per cent of government revenues next year, and yes we have been able to borrow longer-term than other countries, locking in this cheaper financing, but what happens if and when interest rates go up? We are, to paraphrase Bill Gross, writing at the time of the financial crisis, lying on a bed of nitroglycerine. In a crucial line, the OBR explains that the impact of each 1 percentage point rise in short-term interest rates on the deficit has doubled from £6 billion (0.2 per cent of GDP) to £12 billion (0.5 per cent of GDP).
Rishi Sunak understands all of this, and can surely barely sleep as a result: what if a future banking or trade or military crisis sends interest rates up by 3 per cent? The deficit would jump by £36 billion immediately. And what if rates shoot up even higher?
Every big economic crisis overshadows politics for at least a decade, changing everything for better or worse: the crisis and stagflation of the Seventies, in which I include the recession of 1982; the boom, bust and ERM crisis, culminating in the nightmare of 1992; the financial crisis of 2008; and now the Great Pandemic.
Set against the economic carnage, it is therefore staggering that our political landscape remains stuck in an absurd state of suspended animation. Our political classes seem to believe that they can continue as if nothing had happened. The Government clings to an obsolete manifesto predicated on the very opposite of a Covid shock: an assumption that we were richer than we thought, that the supposedly austere 2010s were over, that we could afford to live beyond our means.
Hence why, incredibly, it is sticking with its promise of years of French-style, debt-fuelled public binging on grands projets some useless (HS2), others worthwhile (roads, hospitals and broadband) and lots more cash on day to day spending, not least the levelling-up fund, despite the radically changed economic backdrop.
The only cuts unveiled at the Spending Review were symbolic: the welcome reduction in the foreign aid budget from 0.7 per cent to 0.5 per cent of GDP, and a botched public sector pay freeze which will see most public workers wages rise at a time when the private sector is being furloughed or fired. Sunak rightly didnt extend the increase in universal credit, but that was always meant to be temporary.