The Osborne theory is that any reduction in government borrowing is equivalent to transferring money to the private sector... the result will be a net increase in aggregate demand, and a higher growth rate... buoyant recovery.
The Keynesian view is the exact opposite. Taking £112bn out of the economy will be a net subtraction from aggregate demand... the money the government "saves" will simply disappear as the national income shrinks... stagnation, not recovery.
These two theories are about to be tested. The Keynesians – among whom I number myself – will have to eat their words if growth picks up and unemployment falls in the next 12 months, as £32bn is subtracted from the economy in taxes and spending cuts. Osborne should eat his words if there is no improvement in growth and unemployment.
By the way - I would be delighted if Skidelsky is wrong. I will be so happy if the economy recovers. OK, I will have mixed feelings if economic success for the coalition lends credibility to the reactionary triumphalist social baggage which accompanies their economic theories. Nevertheless I will be delighted if the next 12 months brings millions of new jobs, money coming back into people's lives, a renewed public sphere etc. But I do not think this will happen.