No confidence, no credit - and above all a weak Prime Minister

That is what the 5.9 per cent drop in GDP over the past year and a half amounts to in human terms. Of course, some families are very much worse off than that.

Almost a million people have lost their jobs, and many more are working short hours and fear for their futures.

The really big questions at the moment are these: if this is all down to a global recession, then why is Britain doing worse than others? More importantly, what can we do about it?

You may remember Gordon Brown boasting that thanks to him, our country was "better placed" than other countries to weather the storms. Well, that was complete nonsense - right up there alongside his claim to have "abolished boom and bust".

The truth, confirmed on Friday, is that Britain is one of the few economies still stuck in recession. France, Germany and Japan all ended their recessions six months ago.

Our economy is now smaller than Italy's. When you ask Mr Brown why Britain is doing worse than all these countries you find he has run out of answers.

Only a few weeks ago he was promising us all that: "We are now coming out of recession as a result of the actions that we have taken."  

I would argue that the very opposite is the case. We are still in recession because of the actions he has taken, or lack of actions.

For two things above all are lacking in the British economy - confidence and credit - and our weak Prime Minister seems incapable of producing either.

First, confidence. It is the root of all economic growth. It's confidence in the future that leads a company to hire new staff, and encourages people to learn new skills. That confidence is not there. Why?

Because people can see that this country has big economic challenges ahead and yet there is no economic leadership to overcome them.

We have a government paralysed by dithering and indecision, unable to look beyond surviving the next day. The result is that no one is thinking long term.  

Take the financial sector. We know it needs major change yet the Government has no plan. It passes Banking Acts in Parliament but the Governor of the Bank of England himself says there has been "little real reform".

That's why we need a Conservative government that will restore confidence by abolishing the tripartite system, put the Bank of England in charge, create smaller and more competitive banks, and look at ways of better protecting the taxpayer from the risky end of the trading floor.

Then there is the challenge of Labour's debt crisis. Everyone knows that this country has lived beyond its means and is going to have to reduce spending when recovery comes.

Yet businesses, global markets and credit rating agencies see that the government has no credible plan. Indeed, quite the opposite.

The Prime Minister spent his party conference announcing random new spending commitments when he can't even fund the existing ones. No wonder there is a lack of confidence out there.

Families and businesses fear they are going to be whacked with massive tax rises if Labour is re-elected.  

David Cameron and the Conservatives will bring the strong leadership needed. We're the ones being honest about the hard choices we will take to get a grip on spending, and at the same time protect the vital benefits and improve the key services families depend on.

And while Labour fiddles with its pointless VAT cut, we're the ones showing the country how we are going to get Britain working again, with a detailed plan to provide more help more quickly to the swelling ranks of the unemployed.

Alongside the lack of confidence is a lack of credit. This remains, as it always has been, a credit crunch.

Every day I hear from another business that cannot get access to banking services at a reasonable price. Jobs are being lost needlessly.

Earlier this year Labour finally announced, in a blaze of headlines in this newspaper and others, a series of programmes to help ease the credit conditions. Almost every single one of those programmes has been a failure, with pitifully few families and companies helped.

It is an unreported political scandal. A Conservative government would have introduced a big, bold national loan guarantee scheme that would have got credit to where it was needed.

Today we are proposing a new measure to help. The Treasury and the FSA should combine forces to stop the big retail banks paying out large cash bonuses to their senior bankers this year.

This cash should instead be used to support new lending to the businesses out there caught in the crunch.  

I am not including hard-working staff in the branches who receive small payouts and I am not insensitive to the need for the City to remain competitive and attract the best stars.

There can still be bonuses, but those bonuses this year should be paid out not in cash but reinvested in new shares in the business in order to support new lending.

We are a party that believes in enterprise and Britain being competitive. We know financial services have a huge role to play in Britain's future. The politics of envy will play no part in our plans. But we do need the politics of common sense.  

There can be no justification for using taxpayer support, implicit or explicit, to pay cash into the bank accounts of bankers when the rest of the economy is in such desperate need of that cash.

The bankers should remember that we are all in this together - and judging by the latest recession figures, for longer than we thought.