You wouldn't guess from his performance yesterday, or from most of the mediamacro coverage of it, but there's one big fact about Osborne's Autumn Statement: it confirmed that austerity has failed in its own terms. Back in 2010, the OBR forecast that PSNB in 2014-15 would be just £37bn. It now expects it to be almost £84bn. Taking the last five years together, Osborne has borrowed £96.6bn more than he expected to in June 2010*.

To see why this should be, forget the fancy macroeconomics and think about a simple story.

Imagine there are only three people in the world: Adam, Bill and Charlie. They all buy and sell stuff from each other, but Adam's spending exceeds his income and so he's borrowing from Bill. Bill, in other words, is saving with Adam. Then, one morning Adam wakes up and decides to stop living beyond his means and so cuts the amount he spends with Bill by an amount equal to what he is borrowing. What happens?

There are three alternative categories of possibility.

In scenario one, Bill simply accepts his drop in income and stops saving. Adam has therefore succeeded in eliminating his borrowing.

In scenario two, Charlie is happy that Adam has reduced his spending and borrowing. He had been thinking of buying a new car. But because Bill was lending so much to Adam, he couldn't lend to Charlie. Now that Bill isn't lending to Adam, he can do so. And because Bill was working so much to provide Adam with stuff, he couldn't supply the parts for the car that Charlie wanted. Now that he's not working so much for Adam, he can supply Charlie. In this scenario, Adam's spending cut has unleashed new borrowing and higher spending by Charlie. And because some of Charlie's extra spending finds its way to Adam, Adam sees his income rise and his borrowing fall even more than he planned.

In scenario three, however, things are grimmer. Bill wants to continue to save - perhaps because he needs to prepare for his old age, or perhaps because he's frightened that Charlie will stop spending too. In this case, Bill reacts to Adam's spending cut by reducing his spending with Adam and Charlie. He thus continues to save and Adam and Charlie are also worse off. And because Adam's income has fallen, he continues to borrow.

It shouldn't take any imagination to translate these scenarios to the real world. Scenario one corresponds to a simple case where the Keynesian mulitiplier in one: total incomes fall by the amount of Adam's spending cut. Scenario two is expansionary fiscal contraction. Scenario three is one in which there are big Keynesian multipliers.

There are two points to this tale.

Point one is that one individual can only successfully reduce his borrowing if others want to reduce their saving or increase their borrowing. In scenario one Bill wanted to save less and in scenario two Charlie wanted to borrow more. In both, Adam was able to reduce his borrowing successfully. But in scenario three, Bill wanted to keep saving and so Adam couldn't reduce his borrowing. All that happened was that incomes fell. This tells us that the government is not in control of its finances. It can only borrow less if someone wants to lend less.

Point two is that in setting real-world fiscal policy, the government must asK: which of these three scenarios is most relevant to current circumstances? They've all been true at some time or other.

Herein lies why Osborne failed. Scenario three best describes the 2010-15 world. Foreigners have wanted to continue to save: to clean up balance sheets in the euro area, because oil exporters couldn't reinvest their windfalls domestically; and because Asian economies wanted to run current account surpluses. This meant that someone in the UK had to borrow. Because the private sector didn't want to, the public sector did.

The question for the next five years is: which of these three scenarios will apply? If UK businesses really do want to invest as much as the OBR expects, or if the euro area's balance sheet repair is almost over, we might be in scenarios one or two.

If so, then Osborne's planned austerity might just work better than his actual austerity.

Personally, though, I'm way of this. I think his fiscal plans are like Twisty the Clown: scary, but fictitious.

* Strictly speaking, the figures aren't wholly comparable, as the out-turns use the new national accounting methods. But this doesn't make much difference.