It is not often that the economic policy of a British Labour party leader and the front-runner in America's Republican primaries share any significant space on a Venn diagram, but this is where we find ourselves at the start of 2012. Ed Miliband and Mitt Romney even pitch their arguments for spending and pay restraint at the same audience; here, to the "squeezed middle" while in the States, it is the "vast middle class" who are being promised a government which takes good care of their tax dollars. But surely that sort of discipline should be the norm, rather than a pledge or soundbite? Just over a week ago, I made the first in a series of speeches setting out the values underpinning the Scottish Conservatives - in this case, on the economy. In it, I asked what kind of country we wanted to be - one raised on fairytale economics, borrowing and spending vast sums of other people's money, never expecting to be called to account, or one which returned to the less fur-coat-and-nae-knickers position of hard work, fiscal discipline, reduced personal debt and public borrowing. It may be a blunt comparison, but it is a question which needs asked, because the difference between those countries who are in the most trouble and those that are keeping an even keel is attitude. Last month, when France was put on the watch list by the ratings agency Standard and Poor, the head of France's central bank, Christian Noyer, responded with an unprecedented attack on Britain and the ratings agency itself, saying: "They should begin by downgrading the United Kingdom which has bigger deficits, more debt, higher inflation, less growth than us, and where credit is shrinking." Last week, France lost its triple A rating. The UK, despite having a smaller economy and slower growth, did not. There is an argument that countries should not be slaves to the bond markets as they try to restore their economies, but the bond markets matter as they affect all forms of recovery. In Scotland and the UK, the fight has been about whether the cuts are justified and effective. Essentially, there are two trains of thought. The Keynesian economics of aggregate demand as the primary driver, where governments are encouraged to spend more in a recession to stimulate private consumption and investment. The other is austerity measures to cut the national debt, restore public finances and reduce the percentage of GDP devoted to servicing debt. Bond ratings matter because they affect how much money countries can borrow and at what rate of interest they must pay it back. The interest rates on bonds eventually affect consumer interest payment rates. Increasing interest rates in Scotland by 1 per cent raises the average Scottish mortgage by nearly £1,000 per year. This realisation has finally landed at the shores of the Left in Britain. Yesterday, the shadow chancellor, Ed Balls - a Keynesian by instinct, who was part of Gordon Brown's Treasury team which borrowed and spent its way into the trouble we are in - finally admitted that the patient had to take his medicine. He has stated that public sector pay restraint is right and will have to stay, and that "I am afraid, we are going to have keep all these cuts." I welcome what is a huge movement from Labour to recognise the work that George Osborne is doing. More importantly, I welcome the culture shift that this will help to engender across the country. There is a generation just reaching its majority in Britain who have been fed on a diet of fantasy economics and huge consumerism funded by cheap credit. They are the real victims of a bankrupt New Labour - job hunting at a time of low growth, looking for business loans or mortgages at a time of tighter credit and retiring later on lesser deals. They should not be forced to pay for further mistakes by greater borrowing now with the debt laid on their shoulders later. Advocating a return to hard work and just reward after a time of easy credit and debt fuelled growth isn't sexy. But it is right. And now even the Left are on board. Ruth Davidson MSP, leader of the Scottish Conservative and Unionist Party