Labour is caught between sunny aspiration and cold reality. All around the conference centre in Liverpool are banners with the party’s slogan: Hope Again. This phrase, perhaps the perfect encapsulation of Andy Burnham’s appeal, is emblazoned on the back of the stage as various ministers stand up to give their speeches.

The party is back in the optimism business. It must convince voters that competent mainstream politics can deliver the goods and kill the sense of malaise that sits like a cloud over Britain.

But the basic economic reality facing the country is not a sunny one. It is merciless and partly out of our control. As chancellor John Healey prepared to give his speech to the Labour party conference this lunchtime, oil rose above $108 a barrel. UK ten-year gilts rose to 5.43 per cent – a level close to that of the 2008 financial crash.

None of this is Healey’s fault. He came to office after austerity, Brexit, Covid, the war in Ukraine and the ineptitude of Liz Truss. He was not responsible for Donald Trump’s insane trade war policy or his even more ill-advised conflict with Iran. But it is nevertheless where we are: in the bad place.

After months of sun-kissed optimism from the new administration, Healey levelled with his audience. “The money New Labour had in the 90s is simply not there now,” he said. “Britain has it harder now.”

This speech was the start of a long month of expectation management ahead of the Autumn Budget. Borrowing costs have surged on the back of the Iran price shock. Higher interest payments may have already slashed the headroom Healey has against the fiscal rule. There are a few positive indicators, but the basic reality is that the world is incredibly volatile, mostly due to Trump and Putin, and the UK is particularly exposed.

No matter what else, Healey knows that he must not let this situation spin out of control. He cannot become a Truss Mark Two. So his conference speech was littered with commitments to stick by the fiscal rules, “with a buffer against uncertainty” – suggesting he is going to have to find at least some further savings to build up his headroom.

In this sense Healey is not so different from Rachel Reeves. He is following the same fiscal rules. He is subject to the same economic conditions. And many of his plans for growth in the future are identical to her own. They involve apprenticeships, reindustrialisation and devolution. Reeves was less radical in these areas, but she was fully signed up to all of them and in fact opened the space which Healey now walks down.

The big distinction between Healey and Reeves lies not with their policy but their relationship to the prime minister. Keir Starmer’s No.10 was weak in the face of Treasury demands. It had a fraction of the Treasury’s staff and the PM himself had insufficient economic self-confidence.

This is no longer the case. Burnham picked Healey because he wanted someone on the same page, with modest ambitions, who would not establish an independent power centre. Alongside Louise Haigh, he has now effectively liquidated the Cabinet Office and turned much of it into a new Office of the Prime Minister. Co-ordination of economic policy is taking place at No.10 North.

Downing Street has levelled up its staffing capacity and taken control of large parts of the Treasury agenda. As Healey said today, when he pledged the government to growth, it was “a dual mission from the Treasury and No.10 North”.

This politically-coordinated economic policy and the devolution agenda provide genuine reasons for confidence in the government’s long-term growth strategy. The problem is in the timeline. It’ll take ages to show up in GDP whereas the pressures on the chancellor operate now. He is trapped in a battle against time.

This was why today’s speech was not really economic, or even political, but instead an act of pure messaging. It was an attempt to give himself room to breathe by the assertion of mood.

He must maintain a sense of national optimism and yet somehow convince voters to show patience for any real improvement in their conditions. He must convince people the government can solve problems and yet still reassure the markets of his discipline. It’s a near-impossible needle to thread.

Given how hard a task that is, you have to hand it to him. He did a damn good job of it. I’ve never heard someone sound so convincingly optimistic while saying things which would lead naturally to despair. But no matter how good he is, it doesn’t hide the brutality of the underlying conditions he faces or how unlikely it is that he can come through them unscathed.