The chancellor's cover story for this lack of action is simple: the UK may be in a tight spot, but elsewhere looks worse

We are in "the most dangerous time for the global economy since 2008", George Osborne has rightly observed. And yet the chancellor also told MPs that the government would not do anything soon or directly to tackle the risks. Oh sure, he has plans to lower corporation taxes, and hack away at red tape and obstacles to entrepreneurs – which chancellor doesn't? But there is not a hope that such measures will boost growth in the short term. When it comes to keeping the economy afloat, that task has effectively been outsourced to the Bank of England. As for the mandarins at the Treasury, their sole job appears to be to cross their fingers and hope for the best.

This is the curious paradox of the coalition's economic policy: ministers will admit that things look dicey, but they plan to do effectively nothing to protect the UK from another sharp downturn, let alone improve its growth prospects. Make no mistake: the economic outlook is grim indeed. Just listen to the warning from the Bank's governor, Mervyn King, on Wednesday, as he slashed the forecast for GDP growth this year to around 1.5%: the "headwinds" buffeting Britain's fragile economic recovery are becoming "stronger by the day".

The chancellor's cover story for this lack of action is simple: the UK may be in a tight spot, but everywhere else in the west looks terrible. Here, Mr Osborne does have a point. Starting at Calais, there is a debt crisis that has paralysed northern Europe and crucified governments in the south. On the western flank, Barack Obama has been floored by a tag team of Republicans and credit-rating agencies. Even in the former bright spots of Asia, there are doubts about the sustainability of China and India's boom. At a time when credit ratings for governments are being slashed and bond investors are shunning any but the safest bets, the chancellor can for now claim that the UK is a safe haven.

But there are two serious problems with this. First, there is no guarantee that the financial waters around the UK will remain placid. If there is a string of defaults in the eurozone – a prospect that no longer looks unlikely – a run on British banks may follow. Alternatively, the worries over the UK's growth prospects may get so intense that investors flee for other markets. Second, beyond stability there remains no plan for growth. The chancellor made clear that he would like the Bank to launch another round of quantitative easing, or pumping money into the financial system. Trouble is, there's no guarantee Mr King will play ball or that QE will work. In Washington, Berlin and London, heads of state are now relying on their central bankers to rescue the economy. That is neither democratic nor confidence-inducing.