GEORGE Osborne this week brought back memories of those old Action Man dolls with the string in the back.

You pulled the string and some stock phrases were spoken by the toy. For anyone not familiar with the talking Action Man, the Woody character in the Toy Story blockbusters also had a string in the back that made him speak a small number of phrases during his non-animated phases.

Sometimes, back in the 1970s, when the Action Man was a bit broken, you would only get parts of the key phrases. Bits would be missed out.

When it was announced on Tuesday that the UK had suffered annual consumer price deflation for the first time since 1960, the Chancellor declared this was "good news for families".

Mr Osborne would usually, based on the experience of recent years, have put "hard-working" before "families".

Given the Conservatives' seeming distaste for those not in work, regardless of the fact that huge numbers of people who are unemployed do not choose to be so, we can make an informed guess that Mr Osborne would have meant "hard-working families". In the same way as you could piece together, from memory, what that vintage Action Man should be saying.

The remarkable point, however, was the "good news" phrase emanated from Mr Osborne at all in the context of the UK suffering the ignominy of deflation.

Even by Mr Osborne's usual standards of political spin, which he needed during the last five years when the Coalition Government's policies failed miserably to deliver what was promised, the assertion that the UK's fall into deflation was good news was nothing short of jaw-dropping.

How on earth can it be good news? After all, Mr Osborne himself has set the Bank of England the target of keeping annual UK consumer prices index inflation at two per cent. For the avoidance of doubt, maybe someone should remind Mr Osborne that it is as bad to be below target as it is to be above. The target is symmetrical.

Deflation is not "good news" for families, whether they are in employment or not, or for anyone else.

A major part of the reason that the UK economy is struggling so badly is that a huge proportion of the population suffered years of falling earnings, in real terms, during the Coalition Government's term.

Employers used the fact that the labour market was tough for many people to freeze pay for long periods, cut it significantly, or offer paltry rises.

Then there has been the blight of zero-hours contracts, which will have further restricted households' confidence about their incomes.

That the UK has come to the sorry pass of deflation will hardly make employers put their hands in their pockets to stump up the type of pay rises they should be giving loyal workers who stuck with them as they froze and cut remuneration against a weak economic backdrop. The fall into deflation is likely to be particularly bad for long-suffering public sector workers' pay rises.

And we should not underestimate the importance of decent pay rises in helping to mitigate any future trouble in the housing market - which was inflated by the Coalition Government in what looked like a political manoeuvre - when interest rates eventually start to rise.

Having said that, it appears the UK economy is not in good enough shape to even allow base rates to be raised slightly from their record low of 0.5 per cent, where they have been since March 2009, any time soon. Economists are now forecasting there will be no rate rise until next year.

Meanwhile, any short-term relief from pathetically low pay settlements that arises from deflation should never be mistaken for "good news".

Maybe Mr Osborne got stuck on the wrong stock phrase by accident, but this seems unlikely. He really, really needs a new repertoire of phrases if he is serious about the long-term health of the UK economy.

Unfortunately, it looks instead as if we are going to get more of the same ill-judged policies and rhetoric, with Mr Osborne all wound up to do another Action Man routine with welfare cuts on July 8. You would be unlikely to get long odds if you wanted to bet Mr Osborne would in his July Budget utter what appears at times to be his favourite stock phrase: "tough but fair".

Fair for whom? Just why is it fair that those dependent on the UK's welfare state, in many cases the most vulnerable in society, should continue to pick up the tab for the economic damage caused by the excesses of the high-fliers in the global financial sector.

Mr Osborne has repeatedly declined to give detail on his plans for a further £12 billion of cuts in annual welfare spending. However, you get the impression you will be hearing a whole lot more about these cuts in July.

The Conservatives' slashing of the welfare state continues to look ideological, as it did when they were doing this in partnership with the Liberal Democrats during the last five years. So Mr Osborne is unlikely to lose any sleep if many in the electorate tell him the cuts are not fair.

But the welfare cuts will not be without major consequences for him. This is not because he is any danger of losing his job. Clearly he is not, in spite of the UK's poor economic showing during his period in charge. Rather it is because welfare cuts are a sure-fire way of sucking demand straight out of the economy. They are almost certainly even more damaging than a rise in VAT, another favourite measure of his.

He should not underestimate the impact of further swingeing welfare cuts on an economy that has failed to mount a convincing recovery.

Mr Osborne is restarting from a position of weakness. Deflation and a rock-bottom benchmark interest rate are not signs of a healthy economy.

Another favourite stock phrase of Mr Osborne is about fixing the roof while the sun is shining. But what percentage of the UK population is enjoying anything even approaching economic sunshine right now?

This brings us to another of Mr Osborne's favourite phrases: "long-term economic plan". He and Prime Minister David Cameron never tire of telling us it is working. Is it really?

A long-delayed economic recovery, that is unbalanced and appears to be running out of steam, with the UK plunged into deflationary territory and unable to raise interest rates from rock-bottom. Was that really the plan? And how can it possibly be "good news"?