In traditional terms, the autumn statement could be regarded as neutral. The myriad adjustments to expenditure and revenue were designed to offset each other. But in reality, it is highly restrictive. For the key fiscal aggregates - the current budget deficit, public sector net borrowing and the public sector and government cash requirements - are expected on all definitions to shrink in 2012-13 by 0.5 to 1 per cent of gross domestic product.

The one acknowledgement of depressed conditions is that George Osborne has added another two years of fiscal tightening to 2016-17, two years after the next election. If the tightening does not happen it will not be due to any easing by the chancellor, but to an even worse than expected growth performance. This is what has happened in the current financial year, when key deficit totals grew rather than shrank. It should be noted that the Office of Budget Responsibility largely blames this on unexpected increases in world commodity and energy prices, at least to date. It is in a sense difficult to argue with Mr Osborne. He sees government finances as akin to those of a corner shop whose outgoings must not exceed its incomings - the difference being that cost-cutting by the shopkeeper is unlikely to affect the prosperity of his customers. Others see the budget balance as a policy instrument which can, if need be, reinforce monetary policy in stimulating or restricting demand.

It is not easy to find common ground between these approaches. There is one apparent compromise. This is Labour's official position: that the Budget deficit does need to be reduced, but more slowly and taking economic conditions into account. This compromise will do for now, especially given the general public's acceptance of the corner shop approach. But if a slower fiscal tightening by a government of any party still involves unconventionally high deficits after some years, leaders will have to reconsider the rationale of the balanced budget - a question that even Keynes dodged.

The chancellor's main argument against fiscal stimulus was that it would raise interest rates and thus be self defeating. He did not distinguish between short-term rates, which are heavily influenced by the Bank of England, and long-term rates, which are a market phenomenon. One can debate endlessly how useful low interest rates of any kind are in combating a recession when demand prospects are weak. In any case, Mr Osborne vastly exaggerates the effect of the UK Budget deficit on long-term rates. He need not take my word for it. Lord Lawson reports that a similar argument was used in the run-up to the tough Geoffrey Howe Budget of 1981. But he later thought better of it. He writes in The View from No.11, published 11 years later: "Long-term interest rates ... are determined by the balance of supply and demand in the capital market. As the capital market was becoming increasingly a single global market the public borrowing in any one country [with the exception of the US] had a correspondingly diminished effect." He was right second time round. My own view is that spending increases or tax cuts to boost demand in a bad recession should be paid for by advances from the Bank of England.

If I had to make a case for Mr Osborne's approach I would invoke what used to be called the "balanced Budget multiplier". Some leftwing early Keynesians, despairing of overthrowing the balanced budget dogma, argued for much higher public spending, which they thought would feed straight into higher demand even if paid for by tax revenues. I never bought this counsel of despair. Eventually rightwing Keynesians (and there are a few) argued for a budget balanced at a lower level of tax and spending that they thought would have favourable "supply side" effects. The chancellor has done neither but tried to boost growth by switching between different kinds of spending and tax. This has been predictably cheered by the infrastructure lobby and denounced by the poverty lobby. I leave them to fight it out.

The chancellor has also tried to boost growth by "credit easing". The Treasury has rejected using its extensive bank holdings to boost lending to small companies and instead embraced a complicated, and still only half-formulated, scheme to guarantee conventional bank loans to such enterprises. In view of the uncertainties, the OBR has wisely decided not to adjust its forecasts for the impact of either this scheme or the expenditure-switching policies.

What history will say will depend on who writes it. In my view the UK government's main fault is in swaying the balance of official international opinion away from the pro stimulus approach of the Obama administration (limited by a partly Republican Congress) and towards the restrictionist approach of so-called technocrats who believe in fighting the spectre of depression with ever more austerity, as their forefathers did in the 1930s.