AFTER the baby, a boom?

David Cameron is hoping that the arrival of the new prince will start a succession of good luck stories, starting with an economic recovery, that just might help the Tories get back into power in 2015. The skies are suddenly looking bluer for the Tories than at any time in the last three years.

Europe is at last pulling out of recession, and since the eurozone crisis was one reason why the UK downturn was so prolonged, this is good news – though Eurosceptics who expected the eurozone to disintegrate may be disappointed. Today's UK growth figures will be hailed as confirmation that Britain has avoided a triple-dip recession. It's a feeble enough recovery, 0.4% or so, but should be enough to keep unemployment steady.

Meanwhile the irresponsible Help to Buy scheme will boost house prices, and shale gas will give an illusion of dynamism as firms seek to take advantage of the unprecedented tax breaks on fracking. Heavens, even VW-owned Bentley is to build a new 4x4 in Britain and not in low-cost Bratislava. Press pictures suggest it will be one of the ugliest vehicles ever to hit the British roads, but no doubt hedge fund managers in London will queue up to buy them for their wives.

And on top of the economic recovery, David Cameron will claim victory in the Battle for Britain. A chastened Scotland is expected to vote to stay in the UK in the referendum in September 2014 – sending the nasty Nats packing – after the 2014 Commonwealth Games re-ignites Olympic Brit-mania. Westminster is supremely confident, whatever Alex Salmond says, that a No vote is in the bag, and that Mr Cameron will be credited as the man who kept the UK united and saved the oil revenues for England.

Some Tories are daring to believe that all this could help provide the springboard for a Coalition victory in the next General Election, which will be held on May 7, 2015. The election campaign will be built on manifesto pledges to renegotiate or pull out of the European Union, halt or severely limit immigration, and continue to crack down on benefit "skivers". David Cameron foreshadowed this with his remarks this week about immigrants being a burden on the nation. The reverse is actually the case. As the UK's Office for Budget Responsibility pointed out earlier this month, Britain needs many more immigrants to balance the ageing population. But that is not an argument that wins votes in Tory marginals.

Nor does being soft on welfare. The Conservatives feel the imposition of the benefits cap last week went well, with Labour, bizarrely, suggesting it wasn't tough enough. "Smokin" Lynton Crosby, the Conservatives' election guru, has been banging on to Mr Cameron's people for months about how Britain hates benefits. Following the introduction of Universal Benefit, Mr Cameron will try paint Labour as the spendthrift party, the welfare party, that wants to flood Britain with immigrants and keep Britain under the thumb of Brussels.

"Austerity has worked", Tory billboards will say, "Don't let Labour back to ruin the recovery". With Labour tainted by cash-from-unions, with an indifferent and unpopular leader in Ed Miliband, this might help revive the Cameron administration – in England at least. The Tories seem to have largely given up on Scotland.

But is the economic recovery for real? Well, even a recession as deep as this one – and it has been longer than any of the recessions since the 1930s – can't go on forever. Britain has been in the doldrums for five years; that is a very long time. Some turnaround is inevitable as the self-regulating elements in the economy start to work. After a period of low investment confidence and low consumer spending, people and businesses find they eventually have to open their wallets.

British firms are sitting on some £700bn in cash that has been hoarded during the recession because of aversion to investment. At the first sign of recovery, some of this will be released. Households have been deleveraging – paying down debt – and have been spending as little as possible in the high streets. But families who have been putting off moving house eventually have to do so because of family or job pressures. Big-ticket items like kitchens and beds wear out and have to be replaced. New car registrations rose by 10`% in the first half of 2013 to more than a million, as families and fleets replace ageing models.

This doesn't mean that the fundamental problems of the economy have been addressed. They haven't. Earnings are down by an unprecedented 9% since their peak – an extraordinary loss of purchasing power which will cramp the British economy for years. Output is still below its 2008 level. This bounce-back should not be presented as a real recovery, but that won't stop the Chancellor, George Osborne, from claiming credit for turning the economy around.

Mr Osborne's cleverest, and most irresponsible, wheeze has been the Help to Buy scheme, which essentially uses public money to subsidise prospective home owners. They will be able to take on mortgages of up to £600,000 with only a 5% deposit – the other 15% being loaned by the Government. So, they put up £30,000 and we put in up to £90,000 to make up the 20% deposit. If house prices fall, we take the hit, not the mortgagee or the bank. I'm surprised that a scam like this is legal, but apparently it is. Even the Institute of Directors has condemned it.

Help to Buy is expected to pump some £130bn into the housing market, and since only people with secure jobs in the south of England are in a position to buy £600,000 houses, it will deliver a huge gratitude vote in the Tory shires. It is also expected to boost house prices, briefly, even though they remain hugely over-valued in historic terms. Buying votes has never been more costly.

So, what could go wrong? Well, the jobless recovery may eventually turn voters to Labour in the post-industrial areas of England. Ordinary voters are not going to see any significant recovery in their financial circumstances. And seeing Bentleys flying out of the showrooms is not going to make them feel any wealthier either.

The eurozone debt crisis might re-ignite if Portugal goes under and banks start collapsing across Europe. British banks are still dangerously undercapitalised and the Government would not – according to a report this week from the Royal Bank of Scotland – be able to meet the cost of bailing them out in another financial crash. Which could mean a Cyprus situation, with UK depositors being hit.

Finally, Scotland might vote Yes to independence. Mr Cameron would get the blame for allowing the break-up of Britain. Losing one-third of its land mass, its nuclear weapons and most of its oil, could lead to a further collapse in the UK's credit rating. The Unionists have forecast apocalypse for Scotland, but the real fall-out could be south of the Border. For we should be in no doubt: Britain's debt profile is worse than Spain's.

The economy may be showing signs of life, but the patient isn't out of intensive care yet.