It is a long time since a government came up with a giveaway budget on the scale of that presented to parliament by Rishi Sunak: a £30bn stimulus package designed to demonstrate that the age of austerity is well and truly over.

As the Office for Budget Responsibility pointed out, this was the largest sustained fiscal loosening since the package announced by Norman Lamont in March 1992.

But that was a budget a few weeks before a general election, the traditional time for a government to be generous. Sunak’s spend, spend, spend approach was all the more extraordinary for coming in the first budget after a general election – usually the time when chancellors make unpopular decisions.

One crumb of comfort for Labour as it watched a Conservative chancellor steal its clothes was that it has won the intellectual – if not the political – argument. The days when the Tories believed that Britain could cut its way to higher growth – expansionary fiscal contraction, in the jargon of economists – are over.

The most savage attacks on Sunak’s debut budget came from the free-market think tanks, who view Johnson and his cabinet as being a return to Ted Heath and the budgetary laxity of the early 1970s. Matthew Lesh of the Adam Smith Institute warned that “spending like a drunken sailor” was not the way to create a thriving entrepreneurial economy”.

The other crumb of comfort for Labour is that the 1992 budget proved to be only a short-term fix. Within six months of its election victory, John Major’s government was engulfed by a sterling crisis that culminated in the pound leaving the European exchange rate mechanism on Black Wednesday. Brutal tax increases swiftly followed, helping to create the conditions for Tony Blair to become prime minister in 1997. Covid-19 has the potential to bring Johnson’s honeymoon to a rapid end.

The £12bn package of emergency help for households and businesses announced by Sunak is there to ensure that 2020 does not turn into 1992 redux. The measures announced by the chancellor – which dovetail with the Bank of England’s announcement of lower interest rates and incentives for banks to borrow – will not lift the threat of recession in the first half of 2020, but should ensure that growth resumes from mid-year onwards. The chancellor described his assistance as “temporary, timely and targeted”, although the public might take a different view if the UK is forced into an Italy-style lockdown.

But there was more to the budget than merely the government’s response to a global epidemic. The intellectual climate has changed. Borrowing money to invest in public infrastructure and in research and development is no longer the taboo it once was – far from it. The International Monetary Fund and the European Central Bank – once bastions of fiscal rectitude – are now both urging governments to increase spending on long-term investment projects to boost growth potential.

The new mantra is that an era of permanently low interest rates makes it affordable and sensible for finance ministries to bolster spending. Sunak has certainly not held back on this score. Fiscal policy will be eased by 1.4% of national output next year, partly financed by higher taxes, but also by higher borrowing.

According to the Office for Budget Responsibility, the body that produces independent forecasts for the government, the state will borrow almost £100bn more over the next four years than was planned a year ago. Even so, the payoff will be relatively modest. Higher public investment – if sustained – will boost the supply potential of the economy, but only by around 2.5%

In part, that’s because the OBR has a fairly traditional view of how the economy works. it thinks it will be hard for the government to spend as much as it is planning to without the UK running into bottlenecks that will result in upward pressure on wages, rising inflation and higher interest rates. There was, however, little sign initially of the City being spooked – an indication that financial markets expect interest rates to remain low for years to come.

Unusually for a Tory chancellor, Sunak brought his speech to a conclusion by announcing spending increases rather than tax cuts. That’s because the prime minister was insistent that the government deliver immediately on its election promises, which accounts for the other £18bn of stimulus next year. As a result, there was a blizzard of nationwide investment announcements designed to show that that the “levelling up” agenda was under way. The imperative was to get spades in the ground early so that progress would be evident before the next election.

There were few obvious angles in the budget for Labour to attack, although there were scant measures for those on welfare, apart from the time-limited Covid-19 support for sick pay and benefit support.

This was not a redistributive budget, and nor, courtesy of the big investment in roads and yet another shelving of a fuel duty increase, was it a particularly green one.

But this budget was definitely more Maynard Keynes than Milton Friedman. It was a throwback not to Thatcherism, but to the days when governments of both left and right thought they could use expansionary fiscal policy to break the economy out of its low-growth, low-investment, low-productivity trap.