THERE should be the equivalent of the Hippocratic oath for chancellors. It might have saved a lot of pain over the last 15 years, given the damage that austerity has done over the period.

This seems to have been Rachel Reeves’s approach in her latest Spring Statement, where she said little and did even less. Unfortunately, now is not the time for inaction. The patient needs urgent treatment.

To some extent the British economy has a chronic condition. It has never really recovered from the 2008 global financial crisis. In the last 18 years the economy has grown by just 20 per cent. In the previous 18 years, it grew by 55 per cent.

Worse, the current malaise has no new external cause. Of course, the devastating aggression of the US and Israel could yet cause an economic shock on the world, through energy or commodity prices. But the weakness of the British economy to date has nothing to do with that. Since Labour was elected, the economy has been crawling along at a snail’s pace, an average annual growth of 1.5 per cent or so over the period.

If the Office for Budget Responsibility (OBR) is to be believed, performance will weaken further in 2026. In her Spring Statement, Reeves made great play of the fact that the OBR was forecasting better outcomes in future years. But in truth, the projected gains are marginal, and the OBR’s forecasting record is far from unblemished.

One startling indicator of the underlying weakness of the economy is shown in the OBR forecasts for real GDP, which now include the fiscal years 2030-31. But every annual forecast over that time begins with the digit 1. None of them begins with a 2.

As a measure of that weakness, in the latest quarterly data from the Office for National Statistics (ONS), real GDP per head is shown to be falling. This gives the lie to those who claim that prosperity is possible without growth.

When GDP per head is falling, it is arithmetically impossible for average prosperity to improve on a sustained basis.

It is equally foolish to claim that economic recovery can be fostered by households increasing their consumption, as the TUC has recently suggested. If real incomes are not rising, consisting of wages and benefits, then the only way to fund increased consumption is to run down household savings. The net result is that ordinary people are worse off, not better off.

The main claim made for the capitalist economic model is that dynamism of competition leads an endless cycle of investment, innovation and replacement. Instead, the British economy is characterised by weak private-sector investment over a prolonged period, punctuated by frequent crises leading to outright investment strikes.

Reeves and Keir Starmer have repeatedly and rightly argued that we cannot sustain improvements in living standards without growth, and that in turn requires investment. Their problem is that the private sector stubbornly refuses to play ball. The failure of the government to meet is own housebuilding targets is just one striking example of that, despite all the promises that deregulation would lead to a private-sector boom.

The motor of the capitalist economy is profitability. This has been in crisis in the British economy. To give one snapshot; the rate of return on private capital in Britain was an average of 15.3 per cent at the end of the 1990s. It has been just 9.9 per cent so far in the 2020s (ONS data). The Chancellor and the Prime Minister are barking up the wrong tree when the look for a private sector-led investment recovery.

Public-sector fixed capital formation was frequently above 3 per cent of GDP and sometimes above 4 per cent of GDP in the stronger growth period pre-Thatcher. Thatcherism wrought not just devastation to the economy but also to economic policy-making. Public-sector investment was cratered then and has never really recovered.

So, in line with its predecessors this government accounts for student loans and other financial chicanery as net public-sector investment. Real investment in fixed capital, roads, bridges, houses and the like, accounts for little more than 1 per cent of GDP. This explains why our public transport and infrastructure are such a dire condition.

Of course, there is no financial impediment to borrowing for investment. The return on capital for the private sector may be in a long-term downtrend, but anything like a 10 per cent return when the government can borrow at below 5 per cent is a recipe for making money. Yet the government refuses to break from Thatcherite hostility to public investment, putting it to the right of Joe Biden.

There is one exception to this refusal to spend. Reeves’s first boast was that she was “proud to be the Chancellor that is delivering the biggest uplift in defence spending since the cold war.”

Yet in strictly economic terms the spending on the military could hardly be more wasteful. It is consumption, not investment. Weapons production is also a capital-intensive sector, not a labour-intensive one. As a result, all claims that it is “jobs-rich” have no basis in fact. The same amounts invested in health would create three times the jobs, education even more.

In addition, anyone who claims increased participation in US wars will make us safer has not been watching the news these last few days. The first consequence of British support for the latest US campaign was British service personnel coming under fire and their families evacuated from the Akrotiri base in Cyprus.

Funding an expansion of military hardware is money wasted that could have been used on the productive economy. And it is really the opposite of the government’s stated “security” agenda.

There were also serious omissions in the statement. Nothing was done to address the crisis in student loans. There were no new measures to offset the rise in unemployment, which is especially hitting young workers, nothing to ameliorate new cuts to welfare that are in the pipeline, and nothing new for public-sector pay settlements, with the pay awards imminent and MPs awarding themselves 5 per cent pay rises, because of the complexity and hazards they face. Perhaps they should try working in an A&E on a Saturday night.

Altogether the Spring Statement was a wasted opportunity. Naturally, the economy is not in a terminal condition and could respond to the correct treatment. But the same is not necessarily true for this government.