Analysis: George Osborne digs back to the Gordon Brown years in desperate attempt to get us out of a hole

lan A is kaput. Plan B is a no-no. Plan C: deny that Plan A is kaput. When these are exhausted, move to Plan D: when in a hole, start digging.

Roads, bridges, railways, schools … anything to ensure the economy has a pulse.

The autumn statement marked the formal entry of the economy into its bleakest period in living memory: a prolonged era of low growth, with budget deficit and debt towering larger than ever. In the face of all this, George Osborne’s search for the missing growth gene took him back to the micro-measure budgets of the Brown era. Taken together, they could help to hold the rise in unemployment down from the level it might otherwise reach.

They include up to £40 billion in low-interest loans for small and medium-sized firms, vital given figures showing a fall in net bank lending to the sector; £1bn of help for medium-sized firms; £120 million of seed capital tax relief for small businesses and £5bn in new spending to help kick-start a £20bn investment by pension funds in infrastructure projects.

The measures were welcomed by business lobby groups. But there is a missing ingredient: confidence. Many businesses are holding back from expansion while the crisis in the eurozone is unresolved and when there is little prospect of an upturn in consumer spending.

The coalition is now having to deal with the onset of a depression era: a historically long period of virtually no growth in the economy. Depression era economics can broadly be described as those in which conventional policy responses such as stimulus packages and spending boosts just do not work in the conventional text-book manner.

Yesterday’s package is designed to encourage business start-up and growth. The only other tool left in the box is further quantitative easing by the Bank of England. This already stands at £275bn. It is now likely to rise to £400bn, with another £50bn burst expected in the next two months.

This helps to improve the liquidity of the banks and should – in theory – encourage them to lend more. But there is also a dearth of loan demand. And there is a limit to how much government debt the Bank can buy in before this starts to become counter-productive.

There should also, in theory, be keen pension-fund interest in big infrastructure projects. But it takes time for such projects to move through the planning process. They are also notoriously prone to overruns on budget and on timetable. They are also illiquid investments. But we are now desperate to dig ourselves out of the hole. The one remaining plan is Plan M for Micawber: waiting for something – anything – to turn up.