Osborne’s fiscal rule. Fail.

Somebody in George Osborne’s office briefed the press that there would be a “big announcement that made the headlines” in Budget 2016. I think they meant the tax on sugary drinks, or was it the tax giveaway to Airbnb landlords, or the tax cut for large companies?

Not so much a rabbit as a string of hamsters pulled out of a very empty hat.

The thing that is big, and should dominate the headlines is this: Osborne has now missed two of the three targets he imposed on himself less than a year ago. The OBR has helpfully made this into a graphic (see left).

The cap on welfare spending was already breached, now he’s failed to reduce debt, year on year.

The reason is clear: growth has been revised down sharply, from 2.4% this year to just 2%. Productivity growth predicted by the OBR are also significantly down. Instead of picking up, as 2015 figures seemed to show, this was, says the OBR “another false dawn”.

As a result, to hit Osborne’s third and final target — of running £10bn surplus in 2020 — he’s had to impose £3.5bn more cuts on services, £0.7bn on foreign aid and find another £13bn a year by the end of this parliament. Without that, there’d have been a budget deficit.

The £13bn consists of a raid on public sector pensions, around £8bn tax increases and a further £2bn in welfare cuts, according to the OBR. The tax rises come mainly in the form of a delay to implementing a collection change for corporation tax — moving the tax take from the mid-parliament to the end.

Let’s focus on what this means: austerity does not work. Leave aside the Labour charge that it is vindictive against the poor — it is counterproductive in its own terms.

If you impose a “rule” on yourself, which is broken within 12 months because of a serious deterioration in the global economy, and then have to borrow tens of billions more than you expected while— at the same time — planning billions in extra cuts: maybe the rule is wrong?

Osborne confirmed the Bank of England’s inflation target is 2%, and made no overt signal that he wants the bank to increase its monetary stimulus; in fiscal terms he announced the opposite of a stimulus — a small addition to austerity.

Some inside Labour had agonised over whether to announce its own rule last Friday, worried about whether it would hand Osborne ammunition to attack them.

As it turns out Mr Osborne is out of ammunition, full stop.

Osborne’s glum face during Jeremy Corbyn’s speech — an uncharacteristically angry barnstormer — was matched by the glum faces of Blairites as they realised their own party was actually going to inflict moral and political damage on the government.

And here’s the Conservatives’ biggest problem: the OBR figures last November were ridiculously over-optimistic. I think they’re still over-optimistic, and without an increase in quantitative easing from the Bank of England, and a co-ordinated stimulus worldwide, the slowdown will gather pace.

Today’s budget repeats a pattern: as Corbyn pointed out, Osborne’s first budget prediction of the 2010–15 parliament was completely confounded by events; some were beyond his control — but he adjusted policy two years too late to avoid a flatlining GDP graph.

Last month Mark Carney, the governor of the Bank of England, warned “the global economy risks becoming trapped in a low growth, low inflation, low interest rate equilibrium”.

He didn’t add “except Britain, where everything’s going to be OK”. But George Osborne has acted as if that’s the case.

Despite a string of new announcements — lower business tax, subsidies for the oil industry, tax on sugar and new savings vehicles for young people — what matters at a budget is not the string of micro-economic press releases.

What matters is whether the Chancellor has a grip on reality. It looked to me like he is losing it: clutching at the difference between nominal and percentage debt, promising to turn an £8bn deficit into a £10bn surplus in the twelve months prior to April 2020.

That glint in Corbyn’s eye, and the unprecedented steel in his tone, were a signal that — for the first time in nearly a decade — Labour is confident it understands the economic threat better than the government; has a coherent alternative strategy from which to fight its corner. And — who knew? — it has a leader who can outshout Eton’s finest in the Commons.