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The scenario sketched out by Bank of England governor Mervyn King this month, in which a difficult economic adjustment would play out for the next 12 months, followed by a return to a “not so bad” economy, could just play into Labour’s hands in time for a May 2010 election — though it would be too close for comfort.

There is no truth in the suggestion that the Tories are getting cold feet about winning because of the state of the economy. The ideal time for an opposition to take over is when the government is seen by voters to have messed up the economy.

Labour’s position is not irrecoverable but it requires just about everything to go right. Weak energy and commodity prices will be needed to ease the pressure on household finances. The rise in unemployment will need to be modest.

The government’s decisions in the wake of the twin shocks to the economy, including this autumn’s proposed Brown-Darling economic rescue package aimed at housing and downtrodden families, will need to look better than seems likely now. An option floated here, that councils should become mortgage providers again to fill the gap left by funding-constrained lenders, was pushed by local-authority leaders in a letter to The Times last week.

The government, though, also needs to show it is in control of its finances. Official figures showed public-sector net borrowing of £19.1 billion in the first four months of this fiscal year, up from £8.4 billion in the corresponding period of last year.

Economist John Hawksworth thinks the Treasury is on track for £50 billion of borrowing this year, even without any additional measures. In cash terms, the record £51 billion of 1993-94 is in sight.

Last week, Osborne opened up a new front, criticising Labour for burdening future generations with the consequences of its economic mistakes. The government was “willing to mortgage the country for its own short-term survival”, he said. The Tories will attack any autumn giveaway on this basis. They, to recall one of Margaret Thatcher’s famous lines, are enjoying this. The question for them is when to lift the veil on the detail of their economic plans, without giving too many hostages to fortune or ideas for the government to pinch.

In the recent past, the Tories have suffered from providing too much detail, as did Labour in 1992. And so far the plans that Osborne has put up for the government to steal, notably his proposed tax clampdown on non-doms, turned out to be elephant traps for the Treasury.

The economic battle between the parties is about to enter its most intense phase. Labour have to put the errors and confusion of the past 12 months behind them. The Tories’ aim has to be to not let them.

PS: All good things come to an end and, according to the Office for National Statistics, Britain’s record expansion finished in the second quarter, growth being revised down from 0.2% to zero. So the record was 63 consecutive quarters of growth, not 64, and the economy will require Houdini-like properties to avoid a quarter or two of declining GDP, with most economists picking the current three-month period as being the one likely to show the first negative number.

Everything was weak in the second quarter. On the output side, manufacturing and construction fell, while services grew only modestly. As for expenditure, household spending slipped marginally but investment was sharply lower.

I would make more of the end of the great expansion were it not for the fact that we are due a big so-called Blue Book revision of the national accounts figures on September 30. That may give us a different picture of the economy’s recent performance, though it will not change the fact that we are in a sharp slowdown.

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