Anthony Painter

The international political and economic situation is likely to move rapidly over the next few hours and days. All eyes will be on the visit of Dominique Strauss-Kahn, the IMF head, to Germany. Whether a deal for Germany to help fund the Greek public debt can be done will be critical in maintaining a floor under foreign exchange and stock markets. If those talks fail, then market turbulence could begin to, contagion like, infect our political process just as the election is drawing to a close. The Guardian has a running commentary.

So the economy moves centre stage. More specifically, debt moves centre stage. It was already moving clearly into view as a result of the IFS report yesterday into the deficit reduction plans of the major parties. It concluded that by 2014-15 Labour will have to find an additional £45.8billion of cuts, the Liberal Democrats would have to find an additional £34.4billion, and the Conservatives will still need to find an additional £52.5billion. This latter figure marks a fiscal tightening to a degree not achieved since the Second World War.

And then there’s Greece…..

As luck would have it, the leaders’ debate tomorrow is on the economy. It really depends on how things develop today but if Germany digs its heals in- and remember they have regional elections themselves a week on Sunday and the German public is against helping out the Greek economy- then that debate could be in context of major financial turbulence. The response of the major parties in the next 36 hours will be critical to outcome of this election.

The challenge for the Conservatives is to pin debt levels on Labour ‘profligacy’. For Labour, it will need to make the argument that failure to support the UK economy would have led to greater debts and economic crisis ultimately with all that would have entailed for jobs, people’s homes, and businesses. It is more difficult for the Liberal Democrats to make their mark and so this could be the moment the Liberal Democrat bubble begins to deflate. If the Greek situation is not resolved this could be, after everything, about to become an ‘it’s the economy stupid’ election. Ownership over the dominant narrative over the next few hours is essential. What I will say, is that the odds on Gordon Brown ‘winning’ the final debate have significantly shortened. He’s good in a crisis. And he’s good on the economy.

Meanwhile, the Liberal Democrats continue to make gains in the seat predictor. Interestingly, the Conservatives are down by 8, Labour is up 4 as are the Liberal Democrats. This leaves the Conservatives 27 seats short of a majority compared with 19 yesterday. Interesting.