Just when people might be hoping that Brown's troubled premiership couldn't possibly be driven down any lower, an expert opinion from Bloomberg's London correspondent Matthew Lynn will send a shudder down Bitish spines.
It's not only bloggers and journalists who notice when governments look incompetent. So too do investors. Blair might have been less than competent at many things but he gave the impression to anyone who had doubts about Britain's economy, that all was well under control, and that sterling would be a safe haven for international investors who might prefer to hold it, as against the recently stricken US Dollar, or the uncertain Euro.
With Blair's departure, and Brown's clunking fist at the helm, it's not only Labour MPs doing their sums. (Current opinion poll levels would drive 100 Labour MPs from their seats - YouGov giving Cameron an 11% lead). Money people too, eyeing Britain's ballooning deficits, - (both trade and fiscal pro rata are bigger than those of the US) - its incompetent interest rate regime and the errors in handling the Northern Rock fiasco, are getting jumpy.
When money people get jumpy they don't reach for their laptops and blog about it, they just do what comes naturally. They sell. Sterling against the dollar has swung from $2.11 two weeks ago to $2.02 this morning. Have they started doing just that, one wonders?
Lynn writes as follows -
But what if sterling started to fall - not dramatically, but to a more realistic level $1.60 to $1.70?
If that happened, the United Kingdom would be stoking inflation:Britain relies on imports, which would become more expensive, if sterling fell. The Bank of England would be forced to keep interest rates on hold. It might even have to boost them to defend the currency. That would have a ruinous effect on the housing market and consumer confidence. It could tip the economy into a recession...
The effects of a falling currency could work in the longer term to many business' advantage of course, making British produced goods cheaper against the Euro - but short term there is one thing for sure. Brown's reputation for financial competence would be finally shot through.
In his current weakened state, Labour MPs might feel that enough was enough, and it was time to undo the error they made by allowing Gordon Brown to squeeze his way into the leadership unchallenged.
The Northern Rock fiasco will have a far heavier price tag than the UKL 30 billion ($60 billion) it has cost the governemt so far. Britain's reputation as the world premier financial services location will be damaged, let down by an incompetent government. Hopefully the architect of the mess will be done for at the same time.
Money is not politics. It waits for no one. If confidence in Brown is slipping away, and it is, the result will be savage. Matthew Lynn's article might have given a week's notice on what is now likely to follow. A falling currency will surely be the end of hope, and the final humiliation for Gordon Brown and the New labour era of falseness and spin.
UPDATE - Redwood says Brown must get a grip of public spending to get the economy back into balance.