If I have been ill and I say I am better, does that mean I am better than I was or that I am no longer ill? The same ambiguity applies to the phrase “the end of austerity”. If you took this to mean that the public sector had stopped shrinking, then in overall terms you would be correct. But you would be completely wrong to think the austerity that began in 2010 had been significantly reversed.

The chancellor, Sajid Javid, plans for government spending as a share of GDP to rise from 38.1% in this financial year to 38.6% in 2020-21, while this ratio was planned to fall slightly under Philip Hammond. However, the same figure was 44.9% at the end of the Labour government. Nearly all areas of spending are still below 2010 levels in real terms. Overall public spending has stopped being squeezed, but it is still much smaller than it once was.

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Much of the media focus has been on whether the government’s plans break the fiscal rules concerning borrowing set out by Hammond. This is of little interest because those rules made little macroeconomic sense. They aimed to produce a rapid decline in the share of government debt to GDP, when macroeconomic theory says adjustment should be slow. In addition Javid’s spending review is only half the picture. We do not know what the plans are for taxes.

Here Boris Johnson has a problem with Brexit voters. First he has to convince them that good times lie ahead. Second, he and his fellow Brexiters have spent three years telling voters that many of their problems are down to the UK being tied to the EU and their lives will be better when they are “free”. His problem is that this is a lie. Nothing about a no-deal Brexit will make people feel better in any dimension.

Apart from the short-term shortages, we are likely to see a complete breakdown of government and worse in Northern Ireland, independence in Scotland, fruitless trade negotiations with the EU as it insists on a Northern Ireland backstop, painful trade negotiations with the US, farmers losing their livelihoods as they can no longer sell to the EU and lacklustre growth as firms close down or move overseas.

As a result he needs to cheer Brexit voters up once the euphoria of finally achieving Brexit wears off. The one thing he can do is increase spending and cut taxes. Javid provided the spending side of that equation, and it would be extraordinary if Johnson didn’t want to also announce tax cuts during his election campaign. He promised several to get the leadership.

Would this combination of spending increases and tax cuts have any justification in terms of macroeconomic principles rather than flawed rules? The spending increases are justified because interest rates have been too low for too long as a direct result of austerity. Squeezing public spending each year takes demand out of the economy, and so rates have had to be kept low to compensate. Macroeconomic balance requires interest rates to rise modestly and gradually, and Wednesday’s spending review helps push them in that direction.

The case for tax cuts is less clear. Tax as a share of GDP has only risen a little since 2010, and some rise is required to finance the state pension triple lock and a health service that inevitably grows more expensive each year. With spending already rising as a share of GDP, cutting taxes seems to be going too far. However, there is a possible macroeconomic justification for them.

Cutting taxes and raising spending, which economists call a fiscal stimulus, makes sense when the economy is depressed because of deficient demand. The UK economy is depressed, with no growth in GDP per head during the first half of this year. So if this poor performance is due to a lack of demand, we have a case for a fiscal stimulus. But is it?

To answer that question we first need to ask another. If the economy is so depressed, why hasn’t the Bank of England already cut interest rates from their current 0.75%? It suspects that current weak growth reflects a deterioration in supply, not a lack of demand. A recent Bank of England study suggested that the collapse of investment since the referendum may have reduced productivity by between 2% and 5% from what it otherwise would have been. A fall in productivity of that size could well result in today’s flat growth.

Facebook Twitter Pinterest ‘If the economy is so depressed why hasn’t the Bank of England already cut interest rates from their current 0.75%?’ Photograph: Alicia Canter/The Guardian

Any form of Brexit would also lead to a reduction in aggregate supply. Why? The immediate impact is to raise barriers to trade. Trade allows specialisation: we export things we are good at producing, and import things other countries are better at producing. If you restrict trade you need to start producing things you are less good at producing, and this reduces aggregate productivity and with it average wages and incomes.

Does this kill the case for tax cuts? Not quite. The Bank could be wrong about the current situation. Once Brexit happens there are some circumstances where, by anticipating the slow growth to come, demand can fall more rapidly than supply, creating a temporary demand gap that a fiscal stimulus could fill.

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Even if you buy all this, there is a sting in the tail. A good fiscal stimulus should be temporary, so that any consequent increase in the deficit comes to an end. Unless the pre-election tax cuts are temporary (like the 2009 temporary VAT cut), we will require subsequent tax increases and/or resumed spending cuts to bring the deficit back under control. On top of this, tax rises or spending cuts relative to current plans will be required after a no-deal Brexit when the public finances deteriorate.

A more realistic way to think about any tax cuts Johnson may promise during an election is that they are similar to the large tax cuts Donald Trump instigated. The boost to demand was modest because most of the tax cuts were saved. However, they did increase the deficit, and Republicans are now saying spending cuts are required because that deficit is out of control. It is a strategy known as “starving the beast”.

Any tax cuts just before or after a no-deal Brexit would be a strictly temporary affair. We could quickly see these tax cuts reversed, or more likely see the deficit used as an excuse for a fresh round of austerity. Tax cuts may be the sugar used to tempt voters to swallow a no-deal Brexit, but the bitter taste of subsequent fiscal retrenchment would be sure to follow.

• Simon Wren-Lewis is emeritus professor of economics and fellow of Merton College, Oxford. He blogs at Mainly Macro