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In making the case for his deficit reduction programme, George Osborne has often leaned heavily on arguments from authority. Here, from his speech to the 2010 Conservative conference, is a typical example:

On one side there is the IMF, the OECD, the credit rating agencies, the bond markets, the European Commission, the Confederation of British Industry, the Institute of Directors, the British Chambers of Commerce, the Governor of the Bank of England, most of British business, two of our great historic political parties, one of the Miliband brothers, Tony Blair, and the British people. On the other side is Ed Miliband and the trade union leaders who put him where he is.

But even in October 2010, when the austerity consensus was at its height, this was to understate the opposition. As Mehdi pointed out at the time, those on the other side also included Barack Obama, US Federal Reserve Chairman Ben Bernanke, Nobel Prize-winning economists Paul Krugman and Joseph Stiglitz, FT columnists Martin Wolf and Samuel Brittan, Keynes's biographer Robert Skidelsky. One could add that 53 per cent of the "the British people" voted for parties opposed to the Conservatives' economic programme.

Still, Osborne could comfort himself with the thought that much of the political and economic establishment was on his side. What he forgot was that throughout history the economic consensus has often proved disastrously wrong. Now, after austerity has comprehensively failed in Britain and Europe, the intellectual tide is beginning to turn.

In a statement ahead of the World Economic Forum's annual meeting in Davos next week, the heads of the IMF, the OECD, the World Trade Organisation and the World Bank have all warned against too fast a pace of deficit reduction. They declare that fiscal consolidation should be used "to promote rather than reduce prospects for growth and employment" and should be applied "in a socially responsible manner."

Of course, none of these institutions is calling for deficit reduction to be abandoned. They're merely recognising the need for a more balanced approach of the kind that Labour has consistently argued for. Even the credit rating agenices now recognise the risks of too great a pace of austerity. Explaining its decision to downgrade the credit ratings of nine eurozone countries including France, Standard & Poor's - hitherto an advocate of extreme fiscal tightening - cited concerns over growth, not borrowing. "A reform process based on a pillar of fiscal austerity alone risks becoming self-defeating," it warned, "as domestic demand falls in line with consumers' rising concerns about job security."

That the consensus has begun to shift is unsurprising. In Europe, austerity has increased, rather than diminished, the threat of a Greek default and the collapse of the single currency. In Britain, Osborne's programme has entirely failed to deliver the growth and jobs that he promised. The Chancellor told the House of Commons in November 2010 that private sector job creation would "far outweigh" the job losses in the public sector. But the number of public sector jobs lost in the last year (276,000) now exceeds the number of private sector jobs created (262,000). In the last quarter, 67,000 public sector jobs were lost but just 5,000 private sector jobs were created. Moreover, if we reclassify RBS and Lloyds as private sector institutions, there were 3,000 job losses in the private sector.

Delivering his emergency Budget in June 2010, Osborne told the Commons: "Some have suggested that there is a choice between dealing with our debts and going for growth. That is a false choice. The crisis in the Eurozone shows that unless we deal with our debts there will be no growth."But rather than stimulating growth, Osborne's policies have strangled it. Over the last year, Britain has grown at a slower rate than ever EU country except Greece, Cyprus, Portugal, Slovenia and Denmark (see the final column on this Eurostat chart).

For all this, it is the Tories, not Labour, who enjoy a three-point lead in the latest YouGov poll. At the very moment that Ed Balls has been vindicated on the economy, it is his party that is losing the political battle. Labour is learning, to its horror, that you can combine austerity and popularity.