You can pretend there’s a government, delay the Queen’s speech, substitute bluster for a coherent Brexit strategy. When all else fails you can simply hide from public view. But you cannot use make-believe when it comes to the government finances.

If there is to be a pullback from austerity, as signalled by the chancellor, Philip Hammond, on Sunday, that raises the question: what to? Because for the Tories, the deep cuts in spending over the past seven years were not designed simply to balance the books. They were part of a dream about how Britain’s economy would be reshaped: with a smaller state, a more vibrant private sector, more balanced trade, and growth less dependent on families borrowing to consume. That dream has evaporated.

First, the Conservatives have reached the limits of what can be cut. George Osborne found this in 2016 when he was forced to reverse cuts to disability benefits worth £4.5bn by 2020. Hammond found it again in March, when a £2bn rise in national insurance for the self-employed had to be cancelled within a week of the budget. As it stands, Hammond is still nursing this £2bn hole in the public finances. He had to scrap Osborne’s target of balancing the books by 2020, and in the Conservative manifesto this was shunted even further, into the middle of the 2020s.

Second, the effects of eroding and destroying vital state functions are cumulative. You only find out it was a bad idea to cut armed police numbers when terrorists begin marauding attacks. You find out how catastrophic council cuts are when a tower block goes up in flames. All across the public sector – from the A&E department to the Royal Navy frigate – there are fingers tightly crossed against disaster.

On top of this, the Bank of England is about to hike interest rates, as the falling pound pushes inflation above target. If you think the young workers of Britain are angry about Brexit, low pay and low prospects, watch how angry they get as their mortgage payments begin to drain their spending power – already falling because wage growth lags behind inflation.

And on top of all of it is Brexit. The Treasury’s 2016 long-term estimate of the cost of hard Brexit – between £38bn and £66bn a year in lost taxes – has been widely attacked. Nevertheless the short-term costs of unstable government, and an unclear negotiating position, are already being felt.

British public life right now is in the midst of a major, emotion-driven change. There is outrage over the symbolic neglect that lies behind the Grenfell tragedy. There is astonishment at the arrogance that lay behind the May cabal’s decision to risk government stability for a needless election. There is fear stalking the ruling class – fear of mobs and Marxism. Meanwhile, among the progressive half of the electorate, there is a sense of hope and expectation.

The May administration, should it ever solidify, has only a few weeks to get out of crisis mode and develop an alternative strategy to austerity, entitlement and neglect. The problem is that pursuing such an alternative strategy would be against its own material interest. Cap rents and make private rented homes fit for human habitation? That would hit the 70 Tory MPs who are landlords. Hike pay for nurses? That would not only have to be paid for out of corporate taxation but would hammer the profits of the private companies who have been handed lucrative NHS franchises.

Fortunately there is a clear and costed alternative to austerity. Labour’s biggest contribution to the national mood-change this spring was not the Corbyn rallies but the enunciation of a clear alternative fiscal doctrine. Large numbers of voters appear to have understood what the Institute for Fiscal Studies did not: that the wealth of rich people and corporations is more taxable than existing models suggest.

The best remedy for all the nightmares facing Hammond is growth. Growth above trend and above average; growth stolen from other countries in a process of selfish competition. Those who claim this cannot be achieved under the rules of globalisation are forgetting that China, Germany and Canada are all signatories to the self-same rules. Their elites operate a concept of economic national interest that has become alien to the British ruling caste, moulded as it is around the money of foreign property speculators, yacht owners and hedge fund managers.

What must replace austerity is clear: massive investment into the left-behind heartlands; improvements to the creaking transport infrastructure; social housing built on a massive scale; funding for public services and pay for those who work in them sufficient that they no longer operate in crisis mode.

But that’s only half the story. Industrial strategy must be visionary and expansive; monetary policy innovative and loose. That means loosening the inflation target, delaying interest rate rises and mandating the Bank of England to print more money. These are the classic tools not just of social democracy but of liberal conservatism. The tragedy is that an entire generation of Tories has been groomed to view such tools as “Marxist”, and to mistake urgent popular demands for change as “mob rule”.

They are as trapped in their decrepit orthodoxy as the Macmillan and Douglas-Home generation were in their patrician dreams. Indeed, to a far greater extent than the doomed Tories of the early 1960s, they have surrounded themselves with institutions and allies whose survival depends on there being no alternative to austerity.

So austerity is over. But austerity must continue. That is the agony that will kill this government, whoever replaces Theresa May.