So the economy is £18bn smaller than we thought. And wages are rising more slowly than we thought. And to hit a budget surplus just before 2020, we need another £4bn cut in public spending. This is not great news for George Osborne going into this week’s budget, but it is not his biggest problem.

If you want to understand Osborne’s biggest problem, listen to Mark Carney, the governor of the Bank of Engand, who told the G20 summit in Shanghai last month that “the global economy risks becoming trapped in a low-growth, low-inflation, low-interest-rate equilibrium”.

Carney warned the politicians of the 20 richest countries that, despite seven years of money-printing and near-zero interest rates, the vigour of monetary stimulus has “not been matched by structural measures”.

Or listen to Mario Draghi, who warned that the European Central Bank’s massive stimulus programme, announced last week, is all that stands in the way of “disastrous deflation”. Or the Bank for International Settlements chief, Claudio Borio, who told investors last month that the entire economic model based on debt-fuelled growth and financial excess “needs to be abandoned”.

Central bankers are reticent creatures, so when they actually warn of doom it is best to listen.

For Osborne, what it means is that the post-2008 recovery is nearly over – and that he has failed to achieve any of the structural changes needed to survive what is coming.

To use his own hackneyed metaphor, the sun was indeed shining – more accurately an artificial sun powered by a $12tn global money splurge. But he failed to fix what needed fixing, which was not the roof, but the foundations of Britain’s economy.

Let’s acknowledge one achievement. He was right to abandon his own austerity plan, halving the deficit over five years instead of pursuing the ludicrously ideological aim of eradicating it. But he did this too late, and the cost was two years of flatlining growth.

However, the Osborne recovery was bought at a strategic cost: abandoning the plan to rebalance the UK economy. The original idea was to move growth away from consumption towards investment; to replace a trade deficit with a trade surplus, and wean British households off ever-rising property values.

It didn’t happen. Public spending on infrastructure is set to be less than half what it was in the last year of the Labour government. Business investment improved, but in the last half of 2015, it went negative. Meanwhile, trade is still in substantial deficit. Beyond the figures, the visual symbols of Osborne’s structural failure can be seen in any big town or city: apartments being built to satisfy a speculative property boom; streets full of coffee-shop chains for graduates to work in; and employment agencies, where you can sign on for one of the 1.5m zero hours jobs created since Osborne took the helm.

Not all of this rebalancing fiasco is down to the chancellor’s failings. For the entire first term of the coalition, the Eurozone stagnated because of the ECB’s refusal to engage in stimulus. You can bow and scrape to Narendra Modi or Xi Jinping all you like, but it cannot compensate for stagnation on your doorstep.

But the chancellor had choices. He could have set up a national or regional investment bank, instead of trying to simply privatise Lloyds and RBS. There could have been a coherent industrial strategy; posing in the graphene labs at Manchester University did not produce one – neither will handing the exploitation of graphene research to China and Taiwan.

Above all, he could have ordered the Bank of England to meet its own targets. The 2% target Osborne mandated has not been met since 2012, and yet the Bank is always administered a pat on the head and allowed to “look through” the risk of deflation.

If this is the last quarter of Osborne’s time in the Treasury, the sterile correspondence with the bank will stand testimony to a government dead behind the eyes when it comes to monetary policy.

The problem is that now his choices are limited. Productivity growth is poor – and will not increase as long as we go on creating low-paid, precarious jobs. Debt stands at 78% of GDP. And though the banking system has been stabilised, it is still highly exposed to global risks.

So here’s the brave thing to do: steal Jeremy Corbyn’s clothes. In the face of a global slowdown, with deflation and stagnation haunting the G20, Osborne should unleash a pre-emptive monetary and fiscal stimulus.

If you applied John McDonnell’s new fiscal rule, eradicating the current budget deficit only by 2021, you would have tens of billions more to spend over the next five years. Osborne on Sunday signalled instead that he was determined to achieve a surplus by 2020 – even as the economy slows down. It has been done before. The last time Britain faced the challenge of stagnation, needless austerity and geopolitical turmoil – in the mid-1930s – it was a Tory chancellor, Sir John Simon, who switched the taps of public spending back on to fund Neville Chamberlain’s re-armament programme, outflanking Labour in the process.

Osborne’s desire to achieve surplus has always been driven by the need for shock-absorbers when the next global recession hits. But the slowdown is happening now, and the economic forecasters, EY Item Club, now says there is a 30% chance of a global recession.

In the face of this, Osborne should design a Tory version of “people’s quantitative easing”: since the ECB is now buying company debt and bank debt at rates that give away money for free, Osborne should signal the Bank of England to do likewise by raising its inflation target.

The scale of the problem signalled by stagnant global growth, negative interest rates and financial turbulence means Britain needs a second stimulus – done this time in a way that moves us away from import dependence, precarious work and low pay.

Wednesday is Osborne’s last chance to prove he can think outside the austerity box.