Gordon Brown yesterday claimed that higher borrowing was the “responsible” thing to do to maintain growth and output. That put a positive gloss on something that is, in fact, inevitable. Higher borrowing is the direct result of the banking collapse, of falling tax receipts and rising unemployment, and of Mr Brown's insistence, when Chancellor, on emptying the government coffers during the boom years. It would be political suicide to raise taxes, and ideologically uncomfortable to cut spending. It might also be ineffectual. So Mr Brown was saying nothing, other than to try to present an accident as strategy.

Mindful of the markets and the falling pound, the Treasury has been careful to say that it will stick within its existing three-year expenditure limits. Alistair Darling has waxed lyrical about bringing forward public sector projects that were planned for 2010-11. But it is possible that this, too, is rhetoric. The Government may be tempted to overshoot its spending targets. Or the Prime Minister may be hoping to re-use his old playbook, contrasting what he likes to call

“investment” (borrowing) with what he would hope to portray as “Tory cuts”. Why else would he make a speech defending the idea of borrowing, which no one has attacked?

One thing is clear. There is confusion on both Left and Right about how to navigate these economic waters. The speed of events in the global economy and the scale of disruption have left politicians having to react, with little time to think. The Government was right to recapitalise the banks. That does not make it axiomatic that it should dramatically increase public expenditure. But the credit crunch has challenged assumptions on both Left and Right about what is the job of the free market, and what should be left to the State. This is, after all, a Labour government that has partly nationalised some banks in order to protect the free-market economy.

The Government has yet to articulate the distinct role of a Labour administration in difficult times. It is making big bets on the long term without a clear statement of philosophy. Nor have the Conservatives been confident in saying where they differ. Is it right to reduce the size of government in a downturn? Would they oppose a large-scale expenditure programme?

Public works sound attractive. First, the air is coming out of the balloon fast. The boom in the housing and credit markets has made painful adjustment inevitable. But the speed of adjustment makes business particularly vulnerable. Retailers and construction firms report plunging sales. Hence unemployment might rise rapidly. Secondly, Britain's economy is large enough that the State can increase borrowing without risking bankruptcy, keeping consumer spending alive. Thirdly, the country needs bold infrastructure projects such as high-speed rail.

The problems, though, are legion. First, any long-term project is likely to incur expenditure too late to mitigate a two or three-year recession. Franklin Roosevelt's New Deal in the America of the Great Depression did not have to contend with UK planning regulations of the 21st century. There are long lead times in public works projects. Secondly, Mr Brown's performance as Chancellor demonstrated that public sector spending has diminishing returns and can be counter-productive. Thirdly, the scale of public debt makes it risky to incur even more spending. Too much new spending could lead to the collapse in the pound and put pressure on interest rates in the wrong direction. The man who made the Bank of England independent has been surprisingly indiscreet this week about his desire to see a further interest rate cut. But that would be more “responsible” than spooking the markets with careless talk of unfunded expenditure.