Unite general secretary Len McCluskey has come out all guns blazing against the Labour leadership’s ignominious collapse into Osbornomics. After a week in which whatever backbone the Labour frontbench once had crumbled, his intervention is vital – and entirely correct.

The economic case against the government’s spending cuts is simple. If government cuts its spending, demand in the economy falls. If demand falls, firms sell less. Firms that sell less make redundancies and cut wages. Demand falls further. The entire economy becomes locked into a vicious downward spiral. Cutting in a recession makes the recession worse.

This is the macroeconomic mechanism that has been known for at least 80 years. It’s what the great liberal economist John Maynard Keynes described, writing during the Great Depression – attacking George Osborne’s slash-and-burn ancestors.

Yet McCluskey has been attacked by George Eaton, writing at the New Statesman, for failing to recognise the “changed economic reality”. Until he does, Eaton warns, he will not be an “honest participant in the debate”.

Fine. Let’s take the Coalition’s terms of the debate as our starting point. Even if shrinking the debt was an absolute economic priority, it is economically illiterate to think this can be done through spending cuts. Take Greece – an extreme example, but it illustrates the point. Greece, at the end of 2009, had a national debt of 130 per cent of GDP. Two years of aggressive austerity have followed. Greece’s national debt is forecast, this year, to hit 189 per cent of GDP. By squeezing the economic life out of the country, austerity has made the debt problem worse, not better.

On a less dramatic scale, the same process is at work in Britain. The deficit is worsening because Britain is heading back into recession. And Britain is heading back into recession because the cuts are starting to tear demand out of the economy.

It is the failure of the Coalition’s economic policy that has got us here. That is the “new economic reality”. Osborne, Cameron and Clegg may lack the wit to see this themselves. But there is no reason for the rest of us to follow their delusions.

A programme for recovery should start with ending austerity. In a recession, government should be spending, not cutting. That means a programme public investment to create sustainable jobs and rebuild the economy, with the interests of workers and wider society at its heart.

The complete reverse of, in other words, the Coalition’s current efforts. We have a hard fight ahead. But a mass movement against austerity is there to be built.