NOW that the party conference season is over, the next major domestic political event is the Budget. Of course, everything is overshadowed by the ever-widening war being conducted by Israel, which effectively continues to have the full backing of the US and other Western powers, including Britain.

Judging by government rhetoric, it is extremely difficult to know what we should expect from Rachel Reeves’s first Budget at the end of the month. But the cliche that “actions speak louder than words” points strongly in the direction of more austerity. And, like most cliches, this one survives because it contains a kernel of truth.

It is a reasonable judgement to make that, in terms of PR, government economic policy is in disarray. A series of entirely different explanations for economic policy have been offered over the last 12 months.

Until the beginning of February this year, the centrepiece of Labour’s economic policy was the pledge of £28 billion a year investment in the “green prosperity plan,” leading to a just transition towards net zero emissions, which would have been an important contribution to climate change, to creating skilled jobs and to reducing energy bills for hard-pressed households. But that offer was first halved and then very soon afterwards decimated.

Juergen Maier, the former British chief of the German firm Siemens and sometime adviser to Labour on transport and infrastructure, said £28bn was “the absolute minimum” required.

That was replaced with a vaguer “securonomics,” which was quickly replaced with the bolder-sounding plan to recreate “Bidenomics” or even “Bidenomics on steroids.”

It is not clear whether government advocates understood what Bidenomics was, or whether it was effective. They seemed not to consider why it left an insurmountable burden for Joe Biden’s bid for re-election, something which is still dogging his replacement, Kamala Harris.

Bidenomics was a peacetime government spending spree without precedent, which drove up prices in the US from early 2020 onwards and drove down real wages and other incomes as a result. It was never going to be possible for Britain to copy such a splurge in government spending without increasing government investment, even if it was desirable.

The US can just about get away with that type of recklessness because of the international role of the US dollar and the ease with which the US can borrow from international investors. Those days are long gone for Britain.

Then, in March this year, the Labour front bench did not oppose the Tory government’s Budget, which includes ferocious cuts to public spending in future years (once the election was out of the way).

Paul Johnson of the IFS, who is very far from being a Corbynista economist, said at the time that there were “big implicit cuts in public investment spending overall and cuts to many areas of day-to-day spending on public services despite very obvious signs of strain in many areas.”

Labour’s new fiscal rules, introduced at roughly the same time, are just as problematic. In the Labour manifesto of just three months ago, it states, “Our fiscal rules are non-negotiable and will apply to every decision taken by a Labour government. This means that the current Budget must move into balance, so that day-to-day costs are met by revenues and debt must be falling as a share of the economy by the fifth year of the forecast.”

However, widespread reports suggest that the Chancellor is indeed negotiating away some of the self-imposed rules. No wonder.

There are two key problems as they are currently formulated. The first is that on debt, they make no distinction between current public spending on day-to-day items such as health or education, compared to public investment in infrastructure, housing, transport and other areas.

The crucial distinction between the two is that there is a return on investment. Any business or any government maximises its prosperity by maximising the amount of viable, productive investment it can make.

The second is that the key factor impacting fiscal outcomes is the growth rate of the economy. When the economy is growing strongly, tax receipts rise automatically, and some outlays on welfare automatically fall. But when the economy is stagnant or contracting, these trends work in reverse.

The danger is that, without a meaningful growth policy, meeting the fiscal rules implies cutting economic support just when the economy needs it most and exacerbating any downturn.

These rules and the commitments to Tory Budget spending plans then led to attacks on welfare payments and sickness benefits in particular. Some of my parliamentary colleagues are inclined to see shades of the 2017 and 2019 manifestos in all this. I see none, and wishful thinking is never useful in politics.

Most recently though, much of the Labour Party conference was clearly not in a mood to accept a continuation of Tory policies. So, the rhetoric changed abruptly once more, from “things will get worse before they get better” to “light at the end of the tunnel,” and even “an end to austerity.”

This apparent disarray may be attributable to the backlash in the wider labour movement about the continuation or even deepening of austerity. Dismay over the failure to scrap the two-child benefit cap or to introduce universal free school meals has turned to real anger over the cuts to the winter fuel allowance.

These each save tiny amounts of money while the government is seeking to raise military spending to 2.5 per cent of GDP and has pledged £3 billion a year to the Ukraine war “for as long as it takes.”

The question is then posed: what will the Budget contain, a genuine plan for growth or the continuation of austerity? Or even choosing to deepen it?

The signs to date are not encouraging. If we are judging by actions, the green prosperity investment fund has gone, along with the winter fuel allowance. There has been no money left for free school meals or for families on benefits with more than two children. But there is money for war on an unlimited basis.

And, having correctly stated both that strong public services depend on a strong economy and that this requires investment, it has been leaked that departments have been asked to identify swingeing cuts in their capital budgets. Cutting public investment will only act as a deterrent to private investment.

So, if ministers believe they have had a rough ride in what should have been a honeymoon period, just wait for the backlash if there is yet another failed experiment in austerity in the Budget.

Diane Abbott is Labour MP for Hackney North and Stoke Newington.