Osborne is out of options and is running out of time

When they unveiled this as the top line of the LibDem election manifesto three years ago, a lot of people thought it was too ambitious. But along with the new non-means tested pension of £155, also coming a year early, this will help a lot of ageing Scots on low incomes.

Unfortunately, it's unlikely to do the LibDems much good, as they're being dragged down by the Coalition.

This was a defeatist Budget by a Government that has run out of options and is running out of time.

The Chancellor bet the house on a risky ploy using public money to guarantee billions of pounds of mortgage lending to inflate the property market. He had to halve his growth forecast for this year and double his original borrowing targets.

The deficit reduction programme, unveiled with such fanfare in 2010, has failed – comprehensively. "Expansionary fiscal contraction" to use the oxymoronic policy's proper name (which meant growing the economy while cutting public spending) has not worked.

The borrowing continues – £120 billion for three years – and the growth has gone.

Yes, this is a lot to do with the situation in the eurozone and commodity prices and a complex of world factors, but it is essentially about lack of demand in the economy. It's about the lack of money in people's pockets even as employment levels hold up. We are getting poorer quite fast – unless you happen to be rather rich – and this is stifling growth.

You could tell from Ed Miliband's spirited reply that Labour believes this is the Budget for a Labour victory. "It's true: you are worse off under the Tories" jeered the Labour leader, mouthing the mantra his party will use all the way to the 2015 General Election, the campaign for which effectively began yesterday.

Mr Miliband called on anyone on the Tory front bench to put their hands up if they weren't benefiting from the cut in top tax rate. It was a cheap trick – but Conservative MPs looked shifty and miserable.

Labour may have little answer to the debt problem itself, other than more debt. Under Labour the borrowing would be even higher. But politics isn't fair. In a General Election which is clearly going to be all about the cost of living, a Conservative Government led by ex-public school boys faces an uphill struggle to persuade voters that they feel their pain. What is the point of the Tories if they don't improve living standards?

But George Osborne seems content to go down with his fiscal ship. His Budget offered next to nothing on growth. Some £3bn for infrastructure investment is tokenism. To have had any impact it would have needed to be at least into double figures and probably nearer £20bn.

And why not? The borrowing figures are terrible anyway, and at least this money could be borrowed at very low interest rates – meaning that, inflation accounted, it is almost free money. This would at least have shot Labour's fox – the Tories would have been able to say to the voters: "Labour would have had to borrow even more."

Moreover, there is good reason to believe a stimulus programme could work. British business is sitting on around £700bn – the biggest cash pile ever held by the private sector. It's not just banks not lending; it's also companies not spending.

A growth policy through big investments in house building, airports, carbon capture, nuclear power or whatever might have generated economic momentum to get business to invest again. This isn't some wild lefty strategy, but the approach of capitalist America.

What are the alternatives? Britain is in danger of falling into a classic Keynesian demand trap. People are getting poorer; which means they're not spending; which drags the economy down further.

Unemployment figures may be low, but that's only because of the million zombie workers, working short time in zombie companies. For the lowest income groups, earnings are less in real terms than in 1968.

What the Chancellor has tried to do is secure the Tory electoral base – a defensive strategy that suggests the Conservatives are worried about stemming electoral losses in 2015.

The Help to Buy scheme is an echo of Margaret Thatcher's Right to Buy, only this is a giveaway to middle-income people wanting to move up the property ladder rather than get on to it.

It is, of course, using public money to underwrite high house prices, which will not solve the basic problem. But it will please many potential Tory voters in England in a way that a social house building programme would not. Similarly, the childcare payments will help two-income families. Various incentives to small businesses, and cuts to corporation tax, will consolidate the Tory business vote.

But the harsh reality is the base Tory vote is not enough to win elections, as Mrs Thatcher realised.

The Tories are only tolerated by the rest of middle Britain as they are supposedly better at managing the economy. In Scotland, of course, they are not tolerated at all, and this Budget will do little to help them.

Yes, the freeze on fuel duty will be welcome, as will the penny off a pint; though it is, if you'll excuse the pun, pretty small beer. Scots will probably access the Help to Buy scheme, though deposits are not such a problem here.

The Office of Business Responsibility has delivered another very conservative forecast for oil revenues, contradicting those of the Scottish Government and this could undermine the case for independence; as could the reduction in corporation tax to levels the SNP used to say could happen only in an independent Scotland.

But there is nothing in this Budget to alter the course of the economy. And the changes to the Bank of England's inflation remit can only lead to higher inflation – currently nearly 3% – at a time when wages are falling in real terms, especially in the public sector.

If this is an election winner, then I don't know what an election-losing budget would look like. The Government is in danger of sacrificing itself on the altar of a fiscal orthodoxy that not even the CBI believes in any more.