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The sun is shining on the UK economy and on the Conservatives, says Fraser Nelson

George Osborne is portrayed as an axeman in today's Sunday Times. His axe hovers over a trembling mum, dad and kids. That image and warnings of the painful budget to come on Tuesday are all on today's ConservativeHome frontpage.

In his News of the World column Fraser Nelson, Editor of The Spectator, makes the case for optimism. Optimism about the British economy and optimism about Tory fortunes. He thinks the electoral cycle might be about to favour the Tories in a big way. Cameron and Osborne (and Clegg) can cut now (without upsetting voters) and go to the country at the next election having fixed the deficit and with the economy growing strongly.

His sunny view rests on three factors.

1 The cuts won't be so painful as people think: "Schools spending doubled - but are our schools twice as good? Health spending almost trebled: are our hospitals three times as good? ...This helps Osborne. If doubling or trebling money fails to make things better, why should a 10% cut make things much worse? ...Nationally or locally, British government has more fat in its system than Johnny Vegas."

I agree with this and it is one of the reasons why the "even Thatcher didn't cut this hard' comparisons are false. She came to government on the back of years of IMF-imposed austerity. Cameron comes to government on the back of Brownian excess. My caution, however, is the scale of cuts needed is still very large.

2 The public are expecting austerity: "Osborne's LibDem deputy, Danny Alexander, slipped out £11bn of cuts last week. No one flinched. People are ready for cuts."

Has Fraser seen the press in Sheffield following the cancellation of the Forgemasters loan? I do not doubt that cuts are necessary and that polls suggest that voters are indeed expecting them but only time will tell if they really buy them. To use Cameron's phrase, the rubber is only hitting the road on Tuesday. The unions haven't begun to use their £25m resistance fund. There isn't a Labour leader to co-ordinate opposition... not yet. As Douglas Carswell reminded us yesterday, we ignore the Labour threat at our peril.

3 The economy is looking good: "From mortgages to tax revenues, things are getting better in recent weeks. VAT receipts are coming in 25 per cent higher, twice the rate expected. Corporation tax is way exceeding forecasts. No one is sure why, but the UK economy has transformed from a desert to a fruit machine. And Osborne's quietly pressing 'collect.' Perhaps God is a Tory after all. This is the upswing Gordon Brown had been waiting for. And it arrived: a month too late. With the wind behind him, Osborne just needs to sail as quickly as he can towards fiscal sanity."

I'm not so sure about this. Professor Tim Congdon has already listed five big reasons why the economy may be in for some lean years. Troubles in the €urozone and budget cuts in America when Obama ends his own spenda-a-thon mean things may not be as rosy as Fraser portrays. But I hope they are.

Tim Montgomerie

12.30pm Fraser Nelson has expanded on his analysis over at Coffee House.

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