Damaging Future Hopes for Economic Repair

This constitutional and political crisis, wilfully unresolved by the refusal to call a general election, is bound to have economic consequences just as our financial system and our economy are in desperate difficulties because of Gordon Brown's decade at the Treasury. As the Wall Street Journal notes:

'So far, the markets have proved remarkably sanguine over the spiraling U.K. national debt, and the Labour government's refusal to tackle it. Neither sterling nor the bond markets have collapsed despite plans for unprecedented government-bond issuance for years to come. That is because the markets are betting that Gordon Brown's battered government will lose the election due by June 1, 2010, and will be replaced by a more fiscally responsible Conservative government.'

But if the steady drift to minor parties, resulting from the collapse of confidence in the institutions of the state itself, and in the longstanding political system, is not halted by the ejection of politicians widely regarded as corrupt by the electorate (as is shown in recent polls), then the markets may become less convinced that the kinds of tax rises and expenditure cuts required to begin undoing Brown's destructive policies will be forthcoming.