In March, George Osborne was all tough talk. To repeat one of his favourite phrases, there was a need to “fix the roof while the sun shines” – and that meant driving down public spending to create a budget surplus in 2018-19.

Now the surplus can wait another year. A smoother path of austerity will ease the tension inside Whitehall and economic growth will take up the slack, lifting wages and tax receipts.

Without commitments to boost infrastructure spending and public investment, this becomes a mighty gamble. The chancellor expects those higher wages to be underpinned by a big boost to productivity over the next few years. That will pay for much of his spending while he cuts corporation tax, protects pensioners and maintains the defence budget at 2% of GDP.

Productivity growth has been poor for several years and now lags behind most other G7 countries quite badly. The Office for Budget Responsibility says don’t worry: a further tightening of the labour market will persuade employers to invest and improve output per worker to a level beyond the long-run average.

The question must be, will they? OBR chairman Robert Chote said all the imponderables surrounding who will pay for public services in the future mean the government’s plan for a fiscal charter – promising debt will fall every year as a percentage of GDP – is hostage to fortune.

Chote said the government’s ability to deliver budget surpluses further into the future would also depend in part on how it deals with the challenges of an ageing population, “which will put upward pressure on spending on health, long-term care and the state pension”.

He has predicted a return to deficits by the mid-2020s simply on the basis of ringfencing the state pension system and health service, which increasingly serves patients who are over 65.

Spending extra on older people while taxes stagnate is not a recipe for a successful first world economy.

Part of Osborne’s answer is to heap more of the tax burden on young people while stripping them of benefits. The decision to reduce tax credits will predominantly hit younger families who, after this budget, will wait a year longer for extra childcare subsidies. Eighteen- to 21-year-olds will be stripped of their ability to claim housing benefit, and should they be poor and opt to go to university instead, will lose their maintenance grant.

Making matters worse, Osborne said the grant will be converted into a loan to supplement the student’s existing borrowing. Then it will be added to the ballooning student debt pile, which in the mid-2020s, just when the pension bill is soaring, is expected to limit consumer spending power to a huge degree.

The refusal to expand public investment will also hit younger people as public services that are not heavily used by older people deteriorate or are only funded by the private sector in return for a lifetime fee – a tax by any other name.

In particular, Osborne cut green subsidies. He said he would participate in the Paris climate change conference later this year, but reduced this year’s subsidy to green energy suppliers through the climate change levy by £450m, a cut that will rise to £900m by 2020.

The Resolution Foundation thinktank expects the new deal on public finances laid out in the budget to mean that cuts to public services continue at broadly the same pace as in the previous parliament. It estimates that spending on public services is set to be around 16% lower in 2019-20 in real terms than it was in 2009-10.

So the almost audible sigh of relief from some anti-poverty charities when the chancellor reined back his accelerated austerity schedule should be offset by the fact it will continue relentlessly for the rest of the parliament.

With protected budgets – to which we must now add defence – grabbing a larger share each year of a declining pot, that will leave many more essential local and social services to charities and other sources.