Bloomberg

Could the crisis spark off an early general election?

I don’t claim to be an expert in the financial markets but just how seriously should we take the news the the latest British bond fails to find enough buyers? It sounds awful – but is it?

The idea that the markets will no longer fund the government is something that sounds coherent and most people will grasp it. The question whether or not it is serious?

On Spectator Coffee House Fraser Nelson, who it should be said is no friend of Mr. Brown, has it like this: “..Is the Government about to go pop? If Britain does go to the IMF it would be because the Government fails to find buyers for its debt. And this morning, for the first time in seven years, this happened. It could be a one-off, it could be for technical reasons as yet undisclosed. But given how dependent Brown is on being able to bum money from the City, a so-called buyers’ strike (ie, when investors say ‘we don’t want your crappy debt’) will be hanging over him like the sword of Damocles.”

…..So at the G20 on 2 April, Brown’s mind will be on something else. He is planning another debt auction then, and if it fails to find buyers then word may be out: Britain is going bankrupt. All of this explains why his so-called quantitative easing stipulates that the freshly printed money should be used to buy ropey UK government debt. But even this policy may not be enough..No one can really tell, yet, whether the end is nigh. But if the end does come for Brown’s spending plan, it would start with a failed gilt auction.

And if “the end really is nigh” what’s that going to do to our politics? Could Gordon be forced into a general election because of the economic situation?

William Hill Politics has 100/30 on a 2009 general election. Should we be thinking of that?