Osborne went considerably off the leash with his claims, saying that Labour secretly planned to raise income tax, and implying that civil servants had, in allowing the plans to be forged, given up something of their political impartiality. Stung, the servants told Osborne to drop the Hardy Boys schtick – the “secret plans” were actually in the public domain as part of the Budget, and the increase in income tax was tied to the ongoing growth in the economy.

He’s set in motion the kind of political Pokemon battle we get every election cycle, where each side fires its rhetorical magic at the other in turn, until one of them emerges the victor – so much for Osborne’s recent condemnation of electioneering. But with his vicious fireball deflected by the backroom staff, he was left dangerously exposed over the weekend. Mandelson, I choose you!

The business secretary and veteran political warhorse described Osborne thus: ”Like a boy in a man’s job”. Saucer of milk, etc etc, but while we wait for the homophobic reaction that dogs Mandy’s every move (let alone when he’s talking about boys and men) David Miliband has also slagged Osborne, describing him as “not a serious person”. He described the Tories’ tactics as “juvenile and student politics…the politics of the big lie and the big smear”. Treasury Chief Secretary Liam Byrne added: “this truth problem for Mr Osborne is becoming a pattern of behaviour”. Vince Cable meanwhile has managed to get mileage out of both his opponents in a single sentence, saying: “The public doesn’t need George Osborne’s imaginary secret documents or conspiracy theories to work out that the public finances are in a bad shape”. 

The Tories were also hurt by the Lib Dems rooting through their post-election plans and finding over £50bn of spending pledges that don’t really chime with Osborne’s prudence – new-school policies like high-speed rail sit next to classic Tory stances like cutting inheritance tax.

While it’s all good fun to see the internecine bitchery of The Hills get transplanted onto the UK’s political scene, this all seems like a case of electioneering distorting the genuinely necessary action. Cuts will be an inevitable part of the next government, whoever it is – the public discomfort at a rocketing deficit can’t be ignored. But the need to score points off and differentiate themselves from Labour has drawn the Conservatives, and to an even greater extent the Lib Dems, towards a economic model based on arch prudence. This is framed for maximum gain as brave and wise, positioned opposite Labour’s supposed recklessness with the public balance sheet.

But it’s too soon to make cuts, and using them as such a hot political topic is dangerous; fiscal stimulus needs to carry on for some time yet. Keynesian economists like Robert Skidelsky and William Keegan have written over the weekend about the importance of letting fiscal stimulus continue, Skidelsky with a simplicity that is either charmingly optimistic or dangerously reductive depending on your leanings: “Had the Government given everyone a spending voucher of £500 last Christmas, the chances are we would have had no output gap and full employment today!”

But for all the weirdly mechanistic and presumptive nature of Keynes, his ideas are still valid, and to ignore them for brief political gain would be disastrous. The recent crowing about the end of the recession, along with the City-minded political economists, means that talk of cuts might not seem too premature, but if the stimulus is cut back before much of the country has had time to feel it, then any future government could find itself with a hole where its income tax should be. Once the economy is genuinely growing again, with consumer spending steady, then we can start worrying about the deficit. At the moment, all the talk of cuts is only benefitting political strategists.

The first wave of hesitant calling of the end came in May, with Jean-Claude Trichet, George Soros and others saying an inflection point had been reached, with the economy heading back upwards. A quarter later, and people are saying that the recession is genuinely, officially over (there needs to be two quarters of consecutive GDP growth for it to be semantically, if not realistically, laid to rest). Ben Bernanke, US Fed chairman and recent receiver of mad love and props, said yesterday it is “very likely over”, with a reported rise in consumer spending seeming to underline his soothsaying.

Meanwhile, “arc of insolvency” members Scotland are saying they’re on the way up too, Lloyds Scotland’s chief economist Donald MacRae claims; Mervyn King says all’s well south of the border too, claiming “there are now signs that growth has resumed in the third quarter”; Mandy gave his optimistic two cents last week in China; these folks that the Guardian memorably interviewed at the beginning of the year seem to be on the up; and Wachovia’s senior economist Mark Vitner has said that we’re firmly in recovery mode though added, while upholding the tradition of dodgy meteorological metaphors beloved of economists: “Technically, it’s not freezing but it’s still pretty darn cold outside and you see ice everywhere”.

Yes, that’s the ice of real-term economic misery he’s clumsily referring to – while all this is pretty impressive given the dire straits we were in this time last year, unemployment is still a major inhibitor on quality of life and consumer spending. While the City is looking at the GDP growth, the likes of Next are looking at the high street: “we anticipate that the public sector deficit will become the dominant influence on the economy, bringing with it the combined downside risks of further increases in taxation and cuts in government expenditure”. Brown’s use of the c-word yesterday means that things like tax credits and general welfare could be cut, and taxes brought up to fight the massive deficit, thus impacting on people’s spending power. Meanwhile Chris Dodd, head of the US Senate banking committee, bluntly burst Bernanke’s balloon, saying “I don’t think it’s over”.

So basically until you see banks are overleveraging themselves into multinational deals, and people blithely acquiring 110% mortgages and living on credit cards, you can assume we’re still in the “bust” bit of the cycle.