The Lib Dems' Chris Huhne is wrong in this article in the FT in suggesting that coalition governments are good for fiscal crises. I have also encountered this argument from the Lib Dems at various constituency hustings. Here are the two examples they most often use to support their case.
The first is Scotland, where the Lib Dems were "in government" in coalition with Labour for many years, and how smoothly this worked, or so they say. Now, I am not an expert in Scottish politics, but my only point is this: the Scottish government's role is principally to manage expenditure in the country. By contrast, the next Government in Westminster will have to manage a difficult interrelated triangle of taxation, expenditure and borrowing. There are no Scottish gilts or other forms of debt. I am not aware of there being siginificant Scottish taxes, except for the ability to vary income tax rates which has never been used. The Scottish government is funded by a block grant, and is charged with spending it. The contrast between the two set-ups is extremely important, especially when we are in a fiscal crisis. It stands to reason that a stable coalition is much more achievable when the authority is only there to spend, not to raise taxes or issue debt as well.
The second example they use is Germany. Huhne is quite wrong to suggest that the CDU-FDP coalition there is working well. Don't take my word for it. Listen to the Germans themselves. Just check the reports from the English pages of Der Spiegel.
The coalition took some weeks to get itself together - despite the fact that the two parties had pledged to work together in advance of, and during, the September 2009 election.