The chancellor's Autumn Statement is as political and obscure as we might expect. A bit of spending here and a bit of cutting there. A tilt at the rich and corporations which, except for the change to stamp duty, won’t do much. The ‘banding’ of stamp duty is a kind of mansion tax which in principle would be desirable, if it didn't mean that the government has yet another reason to ration housing. (More houses means cheaper houses, which means a lower return on stamp duty.)

The heart of the statement is, as ever, the ‘deficit’, which is now pretty much as it was in 2010. George Osborne suggested that in order to eliminate it there would have to be further big (unspecified) cuts in welfare, which could, it is said, return government spending to 1930s levels. It might be possible to do that but at a huge cost in political and economic stability.

The Great Recession of 2008 did not become the Great Depression of 2009 precisely because the contemporary welfare state props up government spending and private consumption by ensuring that living standards don’t collapse completely. As real incomes fall, as they have done consistently under the present government, the stabilisers (housing benefit, child benefit, tax credits etc) take up the slack. To fund them, the government has to borrow – especially as it refuses to consider any serious (or obvious) tax increases. And it is able to do so because the markets have shown no alarm at the deficit and it has never been cheaper for governments to borrow. The deflationary effects of spending cuts (falling living standards, for instance) are matched by rises in welfare spending. It is not that the chancellor has been secretly generous, although there have been politically prompted handouts; it is that we still live in a fundamentally Keynesian state.

It is this state that Osborne would like to be rid of. To do so he starts with two advantages: voters' persistent belief that their finances are better managed by the Tories, and the popularity of welfare cuts. But he faces two obstacles: the only popular welfare cuts are cuts to other people’s welfare, and the cuts necessary to achieve Osborne’s ambition would mean cuts to everybody’s welfare – a quite different political calculation, especially as people come to realise how dependent they are on state spending. Destroying the Keynesian state would also destroy the political settlement that has largely been in place since the Second World War. The economic and political consequences of its destruction, as even Margaret Thatcher recognised, could be completely unmanageable. Unfortunately, it is a risk Osborne may be prepared to take.