Adrian Hamilton: It's time for realism, not 'optimism', Mr Miliband

As political rallying cries go, "optimism can defeat despair" isn't exactly one to draw the crowds back to the Labour Party banner. But you can see how Ed Miliband came up with it in his New Year's message yesterday. Through 2011, the Opposition has watched as the Government's expenditure cuts have cut deep into services, education and health without there being the faintest sign of light at the end of the tunnel. Indeed, as each quarter has gone by, hopes of an economic recovery have been put further and further off.

And yet, far from gathering strength and popularity in an age of austerity, Labour's polls have actually declined by the end of the year, putting the Conservatives back ahead. The worse things have become, the less faith the public seems to have in the alternatives offered by the Opposition.

What to do? Keep harping on about the pain on the basis that the British voter will finally turn against David Cameron and his Chancellor and cry out for a replacement? It's a perfectly reasonable tactic for an opposition, but an essentially negative one which faces the riposte, "Fine, but what would you do instead?"

Ed Balls, as Shadow Chancellor, has tried to provide an answer with a resort to Keynesian reflation – borrow more to keep up consumption. It may seem illogical but at least it offers a way to break out of the cycle of declining growth, falling tax revenues and the need for ever greater austerity. The trouble is that the public simply hasn't bought it. Convinced of the need to cut back on spending and paying off debts in personal budgets, a recipe of continuing high debt to keep up spending doesn't seem to make sense.

The general distrust is only made the greater by the suspicion that what Labour really wants to do is just buttress the public sector. Raising debt to put Tube drivers on triple time with three days in lieu is not, as Labour's leadership is well aware, most people's idea of an investment for growth. Little wonder that Labour has studiously avoided supporting public sector strikes. Yet at the same time, with its dependence on the unions, it has not been able to distance the party clearly from them.

Little wonder, too, that its leader is resorting to quite such a flatulent New Year message. You can see all the careful deliberation by the advisers, the pollsters and the experts which went into it. If we are now facing a period of slow growth, if not a fall back into recession, and the public is reconciled to austerity, then the way to distinguish the party from the Government is not through alternative policies but through contrasting tones.

To George Osborne's constant reiteration of the need to go on tightening belts, you counter with a contrasting tone. By talking of "optimism", of "rising to meet the challenges Britain faces even when the challenges are so great", and appealing to a tradition that "tough times have seen us not lower our sights but raise them", Miliband is aiming to paint the Government as pessimistic. By painting all about with white, you make your opponent appear black. As Miliband put it yesterday, "When those in power say, 'You're going to face five bad years and there is nothing you can do about it', that is a statement of their values and their priorities."

This may seem clever to those within the political nexus. Indeed, Conservative commentators are saying much the same about Cameron, urging him to adopt a new tone of confidence, realism or whatever. Leaders must project more of their inner selves and their true values, goes the cry, as if the present generation of young and professional politicians have any inner selves to project and as though the call for more "character" is anything more than advice on tone.

It isn't. The politics of "positioning", brought to fruition and seemingly so effective under Tony Blair, has run its course – if indeed it was ever anything more than putting a colour gloss on a period of unprecedented and seemingly unstoppable economic expansion. But those days are over and nearly everyone knows it.

What most people realise – although the political establishment has been far slower to recognise – is that this change is both inevitable and right. A large section of the population enjoyed the days of easy credit and unending consumption. Many didn't concern themselves with the morrow. But few were surprised when it came to a stop – nor, in the aftermath of the financial crisis, that the economic reverse would be long-lasting as debt was paid off. It's why, despite all, the voter has unenthusiastically accepted the Government's definition of the causes of the crisis and the medicine needed to get out of it.

If 2011 was the year when it finally dawned on governments and forecasters that the recovery wasn't going to be a slow-but-sure climb out of the recession caused by the 2008/9 crisis but a long, drawn-out period of low if any growth for a decade or more as debts were paid off, it has to be said that the public was way ahead of them. Survey after survey has shown an early and deep-seated sense of fatality – pessimism or realism, as you wish – about the situation and politicians' ability to do much to alter it.

Ed Miliband would have people's faith restored by "optimism" but his New Year message is miserably short of any measures to make it happen. Indeed, there aren't any policy suggestions at all other than an appeal to hope. But then the Government isn't much better. Having nailed its austerity colours to the mast in the fond hope that all would be turning around by the time of the next election, it has marched on regardless of the worsening weather.

All parties need to adjust their policies to the fact. Instead, Government and Opposition are relying on the other side to destroy itself, the Government by seeming to plough on with a one-club policy while all about them withers, the Opposition by harping on about the failures while never coming up with realistic alternatives.

Talking about the need for growth isn't going to make it happen any more than cutting public expenditure will automatically bring forth a sudden flowering of private business activity. Businesses won't invest until they sense demand; demand won't return until people think their debts are behind them. It would be better if the parties recognised that there aren't alternatives in the sense of grand solutions, that policy now needs to assume a decade of no-growth, and that the measures adopted now should be aimed at the long-term and the internationally agreed. That means shifting resources from consumption to investment and pooling sovereignty in the interests of Europe-wide measures for reflation, which neither side seems ready to contemplate. A degree of pessimism wouldn't make a bad start.

a.hamilton@independent.co.uk