Yesterday a sale of Government debt flopped. This is not normal. The last time there was such a serious failed auction was 1995. Financial newscaster Bloomberg describes it as a vote of no confidence in Brown by investors. It may be seen as a dull old business page story, but depending how it runs, it could be one of the year's most serious things for all of us.
The Conservatives and George Osborne have repeatedly warned that running a deficit budget, trying to borrow our way out of recession with already stratospheric levels of public debt and making no credible plans for balancing the budget will lead inevitably to disaster.
And looking at the hard numbers they are absolutely right. Sterling has collapsed on World markets - falling by some 30%. Our recession will be deeper than elsewhere, with a 3%-5% contraction on the cards this year. Our budget deficit at 10% of GDP will be higher than elsewhere. If the World is your oyster, why should you buy British Government debt when interest rates are so low and the risks so high?
The Labour High Command's battle plan has been to get past the election with a scorched earth policy and leave the Conservatives facing financial chaos, a potential gilt strike and immediate difficult decisions on public spending to win back the confidence of the global financial markets whose support we need. It is too early to be sure, but it looks like the markets have struck first. It casts grave doubt on the chances of the second fiscal stimulus package Brown is so desparate to have in the Budget. More worrying is that gilt yields - and interest rates - might have to be raised.
The worst case is that we could find it hard to get people to buy government debt at all. Then it's IMF time and a repeat of the disgusting humiliation of the 1970s. Never again!
