George Osborne, cheered on by the Institute for Fiscal Studies, basked in self-admiration last week. With a tweet, Osborne joined in celebrations around the elimination of the deficit on Britain’s current budget – used for day-to-day spending on, for example, the NHS, housing, education and local government.

The cheerleaders ignored the consequences of that “achievement”, not least of which is the threat to Britain’s economy and social fabric caused by the turmoil of Brexit.

The impact of balancing the current budget has fallen most severely on women and low-income groups, as the Women’s Budget Group has shown. They are the nurses, carers, teachers and lecturers who deliver the civilisational services that make our society decent and stable; a place you want to live in. Cuts fell hardest on them, and on those who depend on their services.

But there has been another long-term and deeply damaging impact: the decline of Britain’s local democracy and accountability. Osborne, the most political and cynical of chancellors, shifted the worst impact of current budget cuts away from ministers and MPs and on to the shoulders of local politicians in every part of the country. It is doubtful that Britain’s local governments will ever recover.

While employment revived, jobs have been recast as part-time, temporary and insecure

There is growing consensus among economists that Osborne’s post-crisis austerity programme deepened and lengthened Britain’s post-crisis recession, causing public and private investment to fall further and real wages to decline. Making large reductions to government spending is itself a major reason why the economy has been so slow in recovering. (Consider the multiplier effect where an injection of public money helps generate income and tax revenues.)

In his first budget (June 2010) Osborne told parliament: “We are on track to have debt falling and a balanced structural current budget by the end of this parliament” (ie March 2015). He slashed welfare as promised, but the economy slowed further. While employment revived, jobs have been recast as part-time, temporary and insecure. As a result, productivity stalled. These declines will cause permanent damage to the British economy.

Convinced that a chancellor should “never let a crisis go to waste”, Osborne used the opportunity to shrink the state, as cuts to government spending tore into welfare provision and public services. Real spend per head of population fell, and the real spend per head was particularly felt by the vulnerable citizen, as the population grew older and more fragile. Under his watch, total managed expenditure was cut in real terms by £14bn (2016-17 prices). These cuts were made worse by a 3-4% rise in population, and by the increasing needs of an ageing population.

George Osborne (@George_Osborne) We got there in the end - a remarkable national effort. Thank you. https://t.co/8D23AKbuwH

Public sector net investment was allowed to fall from £60bn in 2010 to £35bn in 2016. It caused intense suffering to small and large firms and suppliers, many of which went and are going bust, laying off staff. The insistence on balancing the current budget also hurt millions of individuals innocent of the causes of the crisis. The public anger at the time of the Brexit referendum was palpable.

The former chancellor’s tweet, therefore, was nothing if not hubristic. But George Osborne has every reason to be cocky and audacious. Like Ian Dury’s favourite brickie, Tricky Dickie from Billericay, “He’s doing very well”. Thanks to the largesse of a Russian oligarch and ex-KGB agent, he has a platform (and generous salary) at the Evening Standard and has used it to attack the politicians and party that raised him to high office. He’s no slouch, and, in addition to making lucrative speeches, has a second job. For just £13,000 a day, he stands fearlessly between a US global corporation – BlackRock – and Britain’s regulatory democracy. BlackRock manages $5.1trn of savings largely accumulated by, among others, the world’s pensioners or would-be pensioners – and Osborne’s appointment will no doubt help to keep policymakers and regulators at bay.

Quick guide What is austerity? Show Hide What is austerity? Austerity is how governments across Europe – from the UK to Greece – tried to clear the overdrafts, or deficits, they racked up in the wake of the great financial crisis. How did governments try to achieve this? Their strategy was two-fold. First, cut spending on the public sector, on wages, for instance, or on social security. Second, raise revenue through higher taxes and selling state assets. Greece, for instance, has sold its airports in Corfu and Santorini, among others, to a German company. What was their reasoning? Proponents made a variety of arguments for this strategy. It was said that governments had spent too much money, that everyone needed to tighten their belts. The UK’s then-chancellor, George Osborne, claimed that the public sector was "crowding out" the private sector, taking resources and workers away from businesses. Particularly influential was a paper by two US-based economists, Ken Rogoff and Carmen Reinhart, arguing that once a country’s total public borrowing rose above 90% of its national income, or GDP, growth would slow sharply. Did austerity get unanimous backing? Critics argued that austerity would stop economies recovering from the shock of the banking meltdown and would make teachers and nurses and people with disabilities pay for the excesses of bankers and chief executives. In his book Austerity: The History of a Dangerous Idea, political economist Mark Blyth showed that austerity had been tried before in the 20th century – everywhere from Weimar Germany to 1930s America – and failed, often with politically disastrous consequences.

He has form on this count. After the catastrophic economic failure that was the great financial crisis, he protected the City of London from the wrath of the British public and politicians and from the threat of restructuring and reform. He and his allies did this by reframing political debate away from the City’s reckless self-regulation and risky behaviour, and focused attention instead on the public finances – in particular the current budget.

These were out of kilter largely because the City makes up the biggest, riskiest and most lightly regulated share of the economy. Osborne was so effective at blaming the Labour party and not the City for the state of the nation’s finances that his permanent secretary to the Treasury, Sir, now Lord, Nicholas Macpherson, was forced into a belated rebuttal in 2015. The financial crisis was “a banking crisis pure and simple” Macpherson had to argue, and was not caused by Labour overspending. Quite so.

But Osborne’s ploy worked. By asserting the policy of “monetary radicalism and fiscal conservatism”, Osborne and his colleagues ensured that those responsible for the crisis benefited from the Bank of England’s quantitative easing programme, which inflated asset prices largely owned by the more affluent. Simultaneously, the Conservative government, aided by Orange Book Liberal Democrats like Danny Alexander, used austerity to shift the burden of the financial crisis away from the shoulders of those responsible and on to those least responsible.

It is hubristic to celebrate that “achievement”. Nemesis – that dark, punishing female spirit and goddess – is already at work.

• Ann Pettifor is director of Prime: Policy Research in Macroeconomics and a fellow of the New Economics Foundation