Prudence was once described as Gordon Brown’s ‘other woman’.

When he moved into 11 Downing Street, as Chancellor of the Exchequer in 1997, Mr Brown drew on his Scottish Presbyterianism upbringing to set up his fiscal rules.

Bearing in mind the big spending 1980s and the recession of the early 1990s, his aim was to prevent any future ‘boom and bust’. With faithful Prudence by his side, it was a case of stocking up while times were good, for bad times ahead.

Then came the 2000 Budget, when he opened up a major expansion of Government spending, principally on health and education. Loyal companion Prudence was dumped in favour of a sexy thrill-seeker.

“An economic minx who liked to live life fast” is how Damian Ward, senior lecturer in economics at Bradford University School of Management, describes the change in Government spending that led to the demise of caution and prudence. “When it came to the electorate, dear Prudence didn’t set the pulse racing,” writes Mr Ward in a cautionary blog on the economy. “Prudence liked to save, Prudence liked to tax and thought it better to pay off debt rather than take on more. Prudence was not the sort of girl to ramp up charges on her credit card, nor fill her wardrobe with frivolous outfits, buy cars on tick, or think buy-to-let was a pension.”

The ‘economic minx’, however, dismissed saving and taxes as dull, preferring to “spend, borrow and party hard”. She rejunvenated health, education and local services – but made Gordon Brown’s beloved Prudence appear increasingly dowdy and unfashionable.

“Gordon Brown’s fiscal rules went out of the window in 2000,” says Mr Ward. “It went against his spirit of careful spending but, at Government level, we were saving too much because we had more scope to stock up.”

While opening up spending benefited the NHS and led to improvements to schools, he says the road to economic recovery now rests on big changes to spending and raising taxes.

“The problems we have aren’t just down to the banks. They courted the ‘economic minx’, but the banks are just one element of the problem,” says Mr Ward. “Even if we returned to a balanced economy, we’d still be borrowing 8.5 per cent of GDP (Gross Domestic Product) each year, adding to our debt.”

While the Government’s public spending binge has hit public finances, the economic minx’s ‘live now, pay later’ mantra has created a nation getting by on what our grandparents’ generation called the ‘never-never’. It has become the norm for ordinary people to live off credit cards and loans. Graduates start off their working lives saddled with hefty student debts. Previous generations would rather have gone without than get into debt, but it’s now socially acceptable to be in the red. Mr Ward puts this partially down to a culture of ‘status anxiety’; aspiring to lifestyles we can’t afford. Our obsession with home ownership is also a factor.

“There’s a huge culture of spend. We have felt very affluent,” he says. “When house prices rose, home-owners felt they were worth something, and there was this idea that if everything went wrong, they could always sell their property. That’s not so much the case anymore.” With banks not lending as much and people no longer able to rely on rising property prices, Mr Ward says it will be interesting to see whether there’s a turnaround in the culture of high spending and borrowing.

“For a long time the savings rate in the UK was drastically reduced. Now saving has risen again, but this is largely because people are paying off credit cards and loans,” he says. Real recovery depends on getting rid of excess debt and the only way towards this, advises Mr Ward, is to rekindle our affection for poor old Prudence and bring her back to the economy again, restoring it to the levels of 2000.

But he warns it will take a long time to woo her back. It will mean us taking a long, hard look at our own lifestyles and spending habits, as well as the general state of the economy.

“It comes down to what choices we make at the General Election,” he says. “If voters take the prudence route, it’s a guarantee to cost-saving growth. The question is one of scale – how prudent do we want to go?”