The Conservative-Liberal Government’s softening up exercise for next week’s budget continues without shame.

Although this week’s report from the new independent Office for Budgetary Responsibility reported UK borrowing to be lower and tax receipts higher than the Labour Government predicted in March’s budget, the ConLibs continue with their fiction that having opened the books they have found things to be much worse than they feared, as an excuse for the cuts the Tories have wanted to make regardless.

The nobel prize-winning economist, Joe Stiglitz, the Financial Times’ veteran economics columnist, Martin Wolf, and several others have repeated their warnings that the ConLibs’ policy risks stifling growth, reducing demand and tipping us back into recession - as well of course of pushing unemployment far higher than it would otherwise have been.

This is the crazy policy one expects from the Tories but it is extraordinary that the Lib Dems appear to have meekly swallowed it. Keynes must be turning in his grave!

Another short-sighted and wrong-headed decision by the Government was their announcement today to abolish the Regional Development Agencies.

These provided a much needed strategic development body that could rise above the petty turf wars and nimbyism of some local athorities and ensure that investment, particularly in major infrastructure projects, happened in those places where it was most needed and provided maximum benefit to the region as a whole. It looks like a return to the bad old days of “buggins’ turn” or where those local authorities with the loudest voice or closest friends in Government skew decision making.

The narrowing of the polls, the better economic news and Tory turmoil over Lord Ashcroft and policy have all served to put a spring in people’s step. The bright crisp sunshine also helps.

The acknowledgement by the British Chambers of Commerce that both unemployment and borrowing will be far less than people predicted should boost confidence and help further reduce the deficit.

With Germany going backwards and other EU countries like conservative-run Sweden going back into recession, the next few months are going to be tough. All the more reason for sticking with the support the Government has been giving our economy, rather than withdrawing it prematurely as the Tories advocate.

The latest fall in unemployment is encouraging and means the jobless total is nearly half a million lower than was predicted a year ago.

It is also far lower than in the recessions of the 1990s and 1980s. This is as a direct result of Government action - to save the banks and support the economy, but also the targeted schemes to help people who have lost their jobs back into training or work quickly and support particularly aimed at helping young people.

In the 1980s and 1990s unemployment was considered a “price worth paying” by the then Conservative Government.

During the global crisis of the last 18 months, Tory politicians have said we should “let the recession take it course” and David Cameron has opposed every single measure the Government has taken that has meant the impact of the global financial crisis on individuals, families and businessses has been far less severe than people feared and far less than in the downturns when the Conservatives were in power.

Labour needs to constantly remind people of this as well as point out that the measures the Conservatives propose for the future would risk turning the recovery into a devestating “double dip” recession - throwing more people on the dole and costing the country far more in wrecked lives and needless benefits payments in the long run.

It was encouraging to see Goldman Sachs predicting the UK economy would grow faster than any other major country next year.

Also today, the International Monetary Fund has warned against the premature withdrawal of the economic stimulus – saying to do so, as the Tories advocates, would wreck the recovery.

It’s also heartening to see how repeatedly, when the Conservatives policies come under the slightest scrutiny, they unravel. They’ve changed their policy on tax and marriage four times in two weeks and it’s still not clear.

Climate change, which David Cameron used as an issue to try to portray himself as modern and moderate – is ranked bottom of their list of priorities by Conservative candidates and a growing number of Conservative politicians are defying Cameron on the issue.Airbrushing his image on Conservative billboards was a blunder too – it feeds an underlying suspicion people have about the Tories that what you see is not what you’ll get.

Encouraging figures out this week on reposessions and unemployment. Although both are up - inevitably given the global downturn - they are significantly lower than in both the 1980s and 1990s recessions thanks to the actions taken by the Government. This is all the more noteworthy given that the contraction in the economy has actually been greater.

Repossessions are only running at about a third of their level in the Tory recessions and unemployment is lower here than Germany, France, America and most other leading countries. Odd then for the CBI to be appearing to suggest in today’s FT that they would like to see the support for the economy withdrawn more quickly than our current commitment to halving the deficit over 4 years. I can’t think that the CBI leadership is really speaking for most of British industry in taking such risk with the recovery.

Good news that the Government has given the go-ahead for a new UK Film centre as well as extensions to the Tate Modern and British Museum. Stonehenge is also going to get its much needed new visitor centre too.

Our cultural and creative industries have been a British success story in recent years. They have continued to grow strongly during the global downturn and will provide a lot of the future jobs and growth the country needs.

It would have been a terrible mistake to pull the rug on these projects. It would also have been economic madness. All Governments are supporting their economies at the moment to combat the global downturn and help build a strong recovery.

As the Financial Times’ respected economic commentator Samuel Brittan wrote today: “…demand must be supported by the monetary injections and budget deficits now in place and possibly more of them. The IMF is right to warn against the premature withdrawal of these stimuli. British Tory Bourbons who want a draconian belt-tightening policy either have not read these warnings or think they know better.

Ouch!

Encouraging news on the economy as the Financial Times reports markets soaring, the world recession almost over and Britain leading the way as the first G8 country to see manfucturing recover.

It’s good to see the local press resisting the headlong rush by the national media to talk Britain down and talk us all into a state of deep depression.

The Exeter Express and Echo has launched the “Exeter Bites Back” campaign to highlight the support that is out there to firms during the downturn but also to celebrate the city’s success stories. It is useful to be reminded that the vast majority of UK businesses will come through the recession. The world is going through a financial crisis unseen since the 1930s. But one of the unique elements of this one is the role of confidence. Many businesses are finding it very tough. But I speak regularly to others that are doing well, who worry that there is a danger the media and others are talking ourselves into a worse downturn than is necessary.

The economy is as much about psychology as it is science. If it were an exact science – more people would have correctly predicted the global crisis. There is a danger of talking ourselves into a downward spiral in which we don’t spend in spite of having more money in our pockets and don’t invest because we lack confidence in the future – making things worse and delaying the recovery. That recovery will come. It always does. Even the gloomiest economists expect the world economy to double over the next decade or so.

So, yes we need to be realistic about the current difficulties we face, but also celebrate and nurture our successes and be confident as a country in our future.

It’s good to see Larry Summers, Obama’s chief economic adviser calling for a bigger co-ordinated global stimulus (Financial Times, March 9th)

It’s also encouraging to hear Stephanie Flanders, BBC Economics Editor say on the radio this morning that there is now an international consensus that this is the right thing to do.

A consensus, of course, that does not include the British Conservative Party or American Republicans.

Next month’s international summit in London will be the most important since that of 1933 in terms of determining how the world weathers this storm and what kind of world emerges the other side.

Today’s FT provides a great analysis of the problem and what needs to be done.

Martin Wolf, at his best, reproduces that infamous quote of Reagan’s: “The nine most terrifying words in the English language are:’I’m from the Government and I’m here to help’”.

As a Labour Government, we should be throwing this back at the Tories and other free market fundamentalists at every turn.

Today’s FT also contains a very useful summary analysis of current Tory policies – including on health – turning over the running of the NHS to an unaccountable national quango and reversing Labour’s policy of extended GP opening hours.

The Tories were the only mainstream party of left or right to oppose an economic stimulus package as a response to the global recession.

Now George Bush’s Republicans have joined them. Flying in the face of virtually all the economic advice and Barack Obama’s huge popularity, Republicans in Congress and the Senate voted against Barack’s recovery Bill denouncing it as “socialist”. “Socialist” stimulus packages have also been announced by conservatives Angela Merkel of Germany and Silvio Berlusconi of Italy.

How quickly the false chummyness of Cameron’s Tories toward Barack Obama has vanished!