The prospect of real-terms cuts in "total managed expenditure" — overall spending — is alarming some senior Tories. Kenneth Clarke, the shadow business secretary, recently warned against imposing "calamitous" cuts. One senior Tory said: "It is very difficult to achieve real-terms spending cuts. I hope this is just an aspiration because the economic picture is very bleak."Will Hutton noted yesterday:

Last week, the Institute for Fiscal Studies said that current public spending plans, which involve ring-fencing front-line services in education, health and police, as Osborne wants as well, imply the end of new road building, closing the court system and shutting two-thirds of prisons. But that would only address £80bn of the structural deficit by 2015. By wanting to do half as much again, Osborne and Cameron must end new school and hospital building programmes, radically reduce military spending, slash welfare benefits and make more than 500,000 public sector workers redundant.

500,000 public sector workers redundant would, as I have previously suggested, put 1,500,000 private sector employees out of work.

But Osborne is adamant, as the Guardian reports this morning:

David Cameron and George Osborne are drawing up plans to impose real-terms spending cuts that would see Britain's public services slashed by billions of pounds during the next parliament.

A Tory spokeswoman confirmed that Osborne would cut the fiscal deficit faster than Labour: "Conservatives have set out a clear benchmark, against which we can be held to account, to safeguard Britain's credit rating and eliminate a large part of the structural deficit over a parliament."

In 1992 the Conservatives brought the UK to its knees by absurd faith in the ERM. We had recession as a result, 15% interest rates, and the Tories consigned to the wilderness for well over a decade.

This time they’ve chosen another false totem — AAA rating — with the desire for low interest rates at all costs. We’ll get recession as a result, mass unemployment and (hopefully) the Tories consigned to the wilderness for well over a decade.

It’s not surprising the Guardian also notes:

The prospect of real-terms cuts in "total managed expenditure" — overall spending — is alarming some senior Tories. Kenneth Clarke, the shadow business secretary, recently warned against imposing "calamitous" cuts. One senior Tory said: "It is very difficult to achieve real-terms spending cuts. I hope this is just an aspiration because the economic picture is very bleak."

Quite so. This fixation is massively damaging. It’s also complete negation of the duty of a politician because it passes policy making to Fitch, Moody’s and Standards & Poor. First, we know their ability to rate credit is spectacularly poor. They more than most got sub-prime wrong. second, we know they're in hock to bankers: this passes all policy making to the City. Third, we know the City is bent on destroying the social infrastructure of Britain so they can ring fence its wealth for their own personal benefit. Osborne would, of course, be handsomely rewarded for assisting their game.

But the fault line between the parties is now clear: jobs stabilised under Labour or two million more unemployed to come under the Tories. That’s the choice. I was horribly prescient last summer. Now I just hope Labour has the courage to fight on this basis.