The main object of the so-called pre-Budget report that Alistair Darling, the British chancellor, is presenting this Monday is to inject more spending power into the British economy by a mixture of tax cuts and spending increases, mixed in with a handful of populist gimmicks. The package is likely to be received with cries of “It won’t work” by many City analysts. It is possible to answer some of their objections in advance.

The most frequent objection is to ask: “Where will the money come from?” The short answer is: the Bank of England printing works in Debden. This is not just a debating reply. In a paper currency system there is no fixed pot of money, but a total influenced by human action. The most interesting information in the Bank of England’s Inflation Report is a chart on page 11 showing that the annual growth of broad money and bank credit (excluding certain financial intermediaries) slowed from about 15 per cent early in 2007 to 5 per cent in the third quarter of 2008. In that quarter alone, real money growth (that is, adjusted for inflation) was negative for the first time since the early 1980s. There is clearly scope and need for a pick-up in monetary growth. In the first place, however, the government is likely to finance its new borrowing by issuing government securities.