Supertramp's 'Crisis? What Crisis?' album cover and the Conservative view of the economy

The gentleman on the album cover is maintaining the sunniest of dispositions in spite of the dereliction around him.

The Conservatives were at pains during the General Election campaign to paint a picture that a crisis is what happens when someone else is in charge, attempting to point the finger at Labour and the SNP and issuing dire warnings about what the future might hold. Somewhat curiously, the electorate bought this.

In the wake of the Organisation for Economic Cooperation and Development's note of caution this week on UK fiscal policy, Shadow Chancellor Chris Leslie accused the Conservative Government of "complacency".

Things are already at crisis point for many people weighed down by the misery of zero-hours contracts, low pay, and cuts in welfare benefits. Many people lost good jobs in the economic downturn triggered by the global financial crisis, through no fault of their own.

And it is likely to get a whole lot worse with the July 8 "stability" Budget, with Chancellor George Osborne intent on delivering many billions of pounds of further welfare cuts.

It was interesting to observe the OECD's comments about the need for public spending cuts to be "fair". The Paris-based think-tank also questioned the speed of the cuts planned by the Conservatives, and highlighted the likely resultant drag on growth.

You get the impression that Mr Osborne will be as oblivious to the OECD's warning about the speed of cutting and plea for fairness as our man on the sun lounger was to the scene around him. After all, welfare is clearly Mr Osborne's key target, so it is difficult to imagine the public spending cuts will not hit the poorest and most vulnerable.

Scottish Finance Secretary John Swinney, protesting yesterday over a cut of around £170 million to the Scottish budget this year, said Mr Osborne and Prime Minister David Cameron had an "ideological obsession with austerity".

Mr Osborne would also seem unlikely to let this viewpoint rain on his austerity parade.

While the scale, speed, and mix of austerity constitute a key ingredient of the UK's economic troubles, with things set to get worse as we approach a Budget from Mr Osborne that will be unfettered now the albeit minor input to Government policy of the Liberal Democrats has gone, another potential crisis is looming.

The Conservatives are certainly not demonstrating an aversion to risk with their determination to have a referendum on the UK's continued membership of the European Union.

We underestimate at our peril the grave implications of a vote to leave this huge free trade bloc.

First Minister Nicola Sturgeon has warned this week that a second referendum on Scottish independence will be "unstoppable" if Scotland is forced to leave the EU in spite of a majority north of the Border voting to remain part of the bloc.

She predicts a powerful "groundswell of anger among ordinary people" if Scots vote Yes to continued membership but the UK as a whole votes No. Regardless of which side of the independence debate you were on last year, it would be difficult to argue with her assessment of the likely chain of events in such a scenario.

In terms of the dangers of exiting the EU, we would also do well to heed a warning about the possibility of a sterling crisis from James Anderson, one of the UK's top investment managers.

Mr Anderson, who manages the £3.7 billion Scottish Mortgage Investment Trust and puts the chances of a vote to exit at between one-in-four and one-in-three, has highlighted his worries that people might lose confidence in the UK economy if there were to be a vote to leave the EU.

He said: "I think, at some point, there is a serious possibility ... in the context of a British exit, of a sterling crisis ... that people lose confidence in the fundamentals of the economy."

Mr Anderson cited the UK's trade deficit, weak productivity, and low business investment.

Scottish Engineering chief executive Bryan Buchan has this week warned on the potential impact of protracted uncertainty over the EU issue on investment in Scotland and the rest of the UK. There is no doubt that many, many investors from outwith the EU who set up in the UK do so to gain access to the European free trade bloc. If the UK leaves the EU, they could just as easily set up shop in the Republic of Ireland or other member states.

Mr Buchan said most of Scottish Engineering's member companies would "hope for an amicable solution to the EU question, with Britain remaining in membership under more beneficial terms". And he does not want to wait until 2017 for the referendum, declaring: "May, or autumn, of 2016 would be a much better proposition for companies considering investment in the UK, and of course Scotland."

The huge risks associated with the EU referendum come at a difficult time for the UK economy.

The Conservatives will tell you the economy is doing well, but is it really?

UK growth slowed to just 0.3 per cent in the first quarter, from an already below-trend pace of 0.6 per cent in the final three months of 2014.

Surveys this week from the Chartered Institute of Procurement & Supply do not signal much of an acceleration of expansion this quarter.

Net trade proved a huge drag on UK growth in the first quarter. And business investment in recent years has proved very disappointing, with companies failing to divert the benefits of huge cuts in tax towards capital expenditure. And the unbalanced recovery, which looks in danger of running out of steam, has relied to a very worrying extent on a mini-boom in the housing market that is in large part the result of UK Government measures.

There seems to be more than a whiff of complacency about the economy emanating from Messrs Osborne and Cameron as they prepare to heap on the austerity this summer. Like the man on the Supertramp album cover, they need to sit up, take a good look at what is going on around them, and contemplate the economic dangers that lie ahead, logically and not ideologically.