In a democracy, willingness to inflict economic pain is rarely a route to credibility. Investors will refuse to believe that the policies will survive. Once they reach that conclusion, credibility disappears.

I learnt this in 1992. With the UK economy in recession, the credibility of the government’s commitment to membership of the exchange rate mechanism of the European Monetary System came into question. Many thought that a willingness to raise interest rates when sterling came under pressure would restore credibility. It did the opposite: few believed the pain could be sustained. The government could not enhance the credibility of an incredible commitment.

This experience informs my view on the options for the UK’s government. The arguments put forward for continuing with the planned fiscal tightening are that, in its absence, credibility will be lost and interest rates on government bonds explode. I suspect the reverse will ultimately prove to be the case. In the absence of policies likely to restore economic growth, the planned fiscal tightening will itself be incredible. Investors will believe that attempts to cut fiscal deficits in a prolonged slump will ultimately force a change of course. Commitments to delivering the incredible weaken credibility.