Incomes per head in the west have grown by broadly 40 times over the past 250 years. Economic historians compete with each other for explanations, though none but the very idiosyncratic argues that the key determinant was tight control of the national debt . Rather, the driver is a combination of institutions, rule of law and competition that best fosters human beings exploiting the astonishing and unfolding fruits of science, technology, ingenuity and innovation.

In this context, George Osborne’s simultaneously much lauded and deplored “big budget” last week is largely irrelevant, if not actively unhelpful. His book-keeper’s obsession with boxing the economy and society into whatever shape will best deliver a budget surplus by the end of the decade while preserving as much party advantage as possible will damage the country he purports to serve. Lower tax and lower welfare may be desirable for ideological purposes, but any linkage they may have with high wages, greater productivity or investment is at best indirect, at worst, barely existent. Mr Osborne is selling both party and country a false prospectus.

For the metrics that best indicate our economic vitality are not debt and deficits, but R&D, the number of new companies at the technological frontier growing to global scale, exports and our trade balance. On all of these, our performance is woeful. One of the most dismal graphs in the Office for Budget Responsibility’s budget report is the never-ending forecast decline in Britain’s share of world exports – and this following 2014, when the country experienced proportionally the biggest current account deficit since 1830. Equally, Britain’s R&D spend is now below the European average. The government wants to double exports to £1tn by 2020: apart from the new levy to train apprentices, I could not spot one initiative in the budget that will make a significant difference.

Welfare cuts of £12bn, partially compensated for by increasing the employers’ wage bill by £4bn as a result of the new minimum wage, are not going to transform our innovative capacity or carve out new export markets. Nor are further spending cuts: the non-ringfenced budgets for science, innovation, universities and further education will all necessarily suffer, in varying degrees, in the autumn’s comprehensive spending review. Capital spending is being further squeezed.

As for the famous rebalancing of the economy, a precondition is to make diverting resources into residential property less rewarding by taxing it, and ensuring that it is properly taxed when passed between generations. Council tax is currently based on 1991 property values, and if a revaluation doesn’t happen this year, it will not be done at all. By 2020, English and Scottish property taxation will be levied on values nearly 30 years old. This is what happens in Ruritania, not countries serious about focusing resources and effort on where there are real economic paybacks. Mr Osborne’s passion, approaching genius, is to organise his tax changes to great political effect: it is not to reform the tax system so that it supports productive entrepreneurship. Best inherit a home rather than start a business.

In the real world, the best of our new potential enterprises that might scale up into great companies are cherry-picked by multinationals, many foreign, and the clusters of reinforcing excellence are progressively thinned out. Only the occasional maverick voice speaks out. Last month, Civitas, an independent right-leaning thinktank, produced a devastating piece of original research on the aerospace industry. In Losing Control, Norman Smith and Joseph Wright describe what happened to the 207 UK companies that in 1990 were at the heart of this flagship British industrial success, employing more than 100,000 people and producing £25bn of manufactured goods.

By 2014, they had been gutted. Only 47 of the original 207 had survived as independent British companies, but typically with low turnover, low R&D budgets and little distinctive technology. All the rest with any distinctive technology had been taken over, so that foreign ownership is now 41% – up from 14%. Others have been taken over by UK multinationals or private equity houses, all with the same aim: to run the company for short-term profit rather than medium-term growth.

None of the small companies left has the competitive technological niche to grow to any scale, say Smith and Wright. They scorn the Tory ministers who boast that the whole experience is a sign of UK competitiveness. Rather, Britain’s uniquely lackadaisical approach to ownership allows foreign companies to “strengthen their technology/know how portfolios” with ease – but to the ultimate disadvantage of the British industrial base. There is no prospect of Britain doubling its exports without a contribution from one of our leading manufacturing sectors. But aerospace’s trade balance, although positive, is stagnating – and imports are steadily growing as the sector, like the car industry, becomes a sub-contractor to the world, ownership passes abroad and Britain is left with a string of technology-light, productivity-poor small companies. The lowering of corporation tax has made buying ready-made UK technology more attractive: as it falls to 18%, the trend will intensify.

Apart from delegating discussion of these issues to a team of business leaders headed by John Lewis’s chairman, Charlie Mayfield, little of this featured in Friday’s much-heralded review of productivity, essentially a reheat of the budget measures. Our government is locked into a mindset in which economic problems are rooted in regulation, taxation and the public sector, so its reform efforts are focused there rather than addressing the palpable dysfunctions of the private sector. To the extent that high house prices cause poor productivity growth, relaxing over-zealous planning restrictions is part of the solution. But deregulation needs to be married to moves to raise property tax, along with a rational council and inheritance tax system, together with a drive to encourage local government and housing associations to build. Instead, the government is disabling housing associations from housebuilding, compelling them to sell their key stock and lowering rents.

It is Orwellian. There is a productivity review that will not raise productivity and a budget that will do little to deliver what the chancellor says he wants. This should offer rich pickings for any opposition – but to exploit the possibilities it first has to understand them and then challenge Osborne’s narrative. It is a sign of our shrunken times that instead the chancellor bestrides our economics and politics like a colossus.