By Paul Goodman
Follow Paul on Twitter.

Screen shot 2013-02-23 at 05.29.55My first task of an editing morning is to peer at photos of Fleet Street front pages.  Today's shows, as I write, only one paper leading with Moody's downgrade of Britain's credit rating – evidence that the news neither comes as a shock nor heralds the end of the world.  As Peter Hoskin pointed out yesterday evening, still-mighty America has survived a downgrade without interest rates breaking through the roof.  And the standing of the credit ratings agencies, which didn't see the banking collapse coming, has itself taken a hammering: they themselves, in the eyes of many observers, have been downgraded.

The Government will also comfort itself that, since Ed Balls's plan is to cut borrowing by borrowing more, the Opposition's economic credibility has vanished through the floor.  George Osborne struck a defiant note when the news broke yesterday evening: “We will go on delivering the plan that has cut the deficit by a quarter, and
given us record low interest rates and record numbers of jobs.”  But the harsh truth is that grasping at this comfort blanket – the compromised reputation of the credit agencies and the battered one of the Opposition – will do nothing to exorcise the ghosts in the room.

As the Times's report points out, Moody’s now warns that "the national debt will peak at above 96
per cent of GDP, a level that some academics have argued has hazardous
implications for a country’s economic health".  Very simply, the Government is not cutting debt at all because it isn't reducing the deficit fast enough.  And only the vigorous use of two tools can cut it further: more supply-side action to boost growth – ever-popular on the centre-right – and a faster scaling-back of the rise in public spending, which is far less popular among conservatives in practice than in theory.

The Government's record on making the big decisions that will boost supply and demand is mixed.  Against Iain Duncan Smith's work to bring in the benefit cap, John Hayes's boosting of apprenticeships, Nick Boles's push for more house-building and Michael Gove's school reforms – the effects of which won't fully be felt in the short-term – must be set delay on a big airport decision, compromise over the Beecroft recommendations, muddle over energy policy (how on earth is manufacturing recovery consistent with the carbon price floor?) and timidity on tax, despite the corporation tax reductions.

This brings us to the rub.  The magic of the Laffer Curve will bring, in the medium-term, higher tax yields for lower tax rates.  But Moody's warning is a stark reminder that governments must live in the short-term as well as the medium, especially when they are loaded to the gunwhales with debt.  That means cutting the growth of spending – faster, if more tax cuts are to come, than the Government is doing now.  Does the country have the will for it, when there are few measures that bring quick returns?  (One of the big reasons why the last election wasn't won was resistance by voters to austerity – and the further north one looks, the bigger it was).

Does the centre-right media have the will, either?  The aid budget is some one per cent of public spending.  Windfarms are about 0.1 per cent.  Nor can savings from leaving the EU be presumed, since a referendum, rightly, will decide our membership (and even outside we may, like Norway, end up making a contribution).  By 2050, government will spend one pound in every two spent on health and pensions.  Where are the special features in the right-wing press about where the axe should fall?  (And, yes, ConservativeHome has had a go.)  Tory MPs may talk big about cutting spending, but they tend to act very small when their constituents lobby and threaten.

None the less, neither voters nor the centre-right media nor backbenchers run the country: the responsibility to lead lies fairly and squarely with those we elect to govern.  And while a press release from Moody's may not bring the country to its knees, yesterday's verdict has baleful implications for Ministers.  The press (and much of the Conservative Party) will turn on George Osborne over the weekend – and later, perhaps, at the time of the budget.  Some of the criticism will be fair.  Yes, the Chancellor spends too much time managing the Government's politics rather than the economy.

Yes, he should devote less energy to pushing same-sex marriage, say, and more to sweating over supply-side reform.  And yesterday's downgrading of a manifesto pledge – “We will
safeguard Britain’s credit rating with a credible plan to eliminate the bulk
of the structural deficit over a Parliament" – is a blow to his reputation.  But it is unfair to blame one Minister in a government of over a hundred others, even when he is Chancellor of the Exchequer.  When it comes to the big arguments within the Coalition and among Ministers – airport expansion, green levies, housebuilding, banking reform – Osborne has been on the right side.

Another truth must be faced.  The Chancellor is an erratic strategist.  But he is one of the very few at the top of the Conservative Party: arguably, the only one at all.  This may less reflect credit on him than beam a harsh light on his colleagues, but it's worth bearing in mind. There will be calls for him to go.  But David Cameron is not going to dissolve the partnership on which his project is based.  He may make it back to Downing Street in 2015.  But if the Government doesn't rise to meet the spending challenge, the British economy won't meet the competitivness challenge, either.  We won't just have downgraded governments, but be a downgraded country.