Gordon Clown .Com

Apparently, Gordon has said that he refuses to work together with the SNP in the Scottish parliament, not withstanding the massive defeat that Labour will almost certainly suffer in the elections on Thursday:

Gordon Brown last night warned Scottish voters that he will find it “impossible” to work as prime minister with a Scottish National party-led government in Edinburgh if its leader, Alex Salmond, refuses to abandon his “dangerous and disastrous” plans for independence.

With Labour facing the prospect of losing an election in Scotland for the first time since 1955 to a hostile coalition in his home base, Mr Brown made an impassioned plea to wavering supporters to “come home to Labour” and head off the separatist threat of a “day one conflict strategy” if the SNP wins on Thursday.

Ladbrokes makes the SNP 1/5 favourites to be the largest party with 46 seats to Labours expected 40, but 65 seats in total are required for a majority, which would leave the SNP free to attempt to construct a deal with either Labour or a collection of other parties including the Lib Dems and Greens.

Mr Brown argued yesterday that a new generation of young Scots voters are much more internationally minded than their elders and not “obsessed with constitutional wrangling”.

A “Labour-led Scottish parliament and a UK Labour government can focus on the No 1 priority, not creating constitutional chaos but building a world-class education system,” he said, refusing to concede the possibility of having to work with Mr Salmond.

Now, what is the likelihood of Gordon having a change of heart after the full reality of Labour’s crushing Scottish defeat becomes clear on Friday morning?

It has been a few months since the last time we checked on Gordon’s prospects in the Betfair markets, so lets see how he’s doing now. Then we will gauge reaction to his Budget speech in a few weeks time by checking on the odds again afterwards.
In the “Next Labour Leader” market, we can see that Gordon’s odds are now 1.29, significantly shorter than September’s odds of 1.45. Things are starting to shake out in the leadership race, and it is also a lot clearer now that Blair is likely to stand down soon, so Brown has less time to make any “cock ups” and therefore a better chance of winning. There are, however, two more interesting things to note in the market. Firstly the odds of Brown’s nearest challenger David Milliband have come in significantly to only 11.0. Betfair are good enough to provide charts of how the odds have changed over time and these are displayed below:

The second, and perhaps more important, market to monitor is the “Next General Election - Most Seats” market. This shows how well Brown is doing against Cameron, and it does not make for good news for Gordon. When we last checked in September, the odds on Labour vs. the Conservatives were 2.22 to 1.83. This has now shifted even more in favour of Cameron, and now stands at 2.28 to 1.77. Combine this with the poll results, and things are not looking too good for Gordon.

Recent political events make it look very likely that Gordon will get his greatest wish within the next 12 months and accede to the throne of Number 10 Downing Street. Like most new Prime Ministers before him, Gordon will doubtless be expecting the privilege of a honeymoon period, in which the press lays off their customary day-by-day attacks on the incumbent PM for at least a few months while he gets his feet under the desk.

Evidence is steadily mounting, however, that this may not be the case for Gordon. In fact, now that it appears that the toppling of Blair is fully complete, the press seem to have already declared open season on our dear chancellor, racing to get the early punches in to soften him up. This recent Observer article, for example, can be summed up with the following verdicts on Gordon’s performance:

Tax and benefits: Good if you are on a low income or have children. Bad if you are on a high income or are childless.

Homes and Inheritance: Bad for homeowners, who are not necessarily used to buying tax advice, but whose property values are dragging them into the IHT net.

Pensions: Generally disastrous.

Meanwhile the chances of Gordon reuniting a divided Labour party, and sweeping under the carpet his record as chancellor are looking slim. The following are the latest Betfair odds for Gordon to be worried about:

Betfair Odds for Gordon as Next Labour Leader: 1.45 (slightly lengthened from 1.42).
Betfair Odds for Next General Election: Labour 2.22 (lengthened from 2.1), Conservatives 1.83 (shortened from 1.93).

Not been the best week for Mr. Brown. Approximately 6 months after Project Gordon disasterously failed to “put a more human face on the Iron Chancellor”, Blair has come out and said that he will remain in office for “at least another year”. UBS have predicted that CPI is about to hit 2.8%, which means more rate hikes are on the way, which is unlikely to impress Britain’s over-indebted population of Labour Voters, as they see their mortgage repayments hit heights they never expected. The economics editor of the Guardian summed up the situation nicely today, reiterating the fears that people appear to be facing, after one tiny measly 0.25% rate rise:

We will see in the coming months just how many individuals in Britain are living on the edge, with only modest increases in rates enough to tip them over the edge. My guess is that the economy is far more sensitive to a quarter-point rise in borrowing costs than it was, especially if there is a threat of further moves from the Bank. The fact that insolvencies were 66% higher in the second quarter of 2006 than in the second quarter of 2005 is a sign of just how tough many people are finding it to meet their financial commitments; add in spiralling energy costs, rising unemployment and higher interest rates and you have the recipe for extreme difficulties for many households.

So, despite being listed in Time Magazine’s 100 most influential people in the world (Blair was excluded) last year, things are not looking too good for Gordon. He may not be facing serious competition for the succession (John McDonnel notwithstanding), but the real question is: if and when Gordon hits Number Ten, how long is he expecting to remain?

Betfair Odds for Gordon as Next Labour Leader: 1.42
Betfair Odds for Next General Election: Labour 2.1, Conservatives 1.93

As a nation of borrowers awaits the interest rate decision announcement from the Bank of England’s Monetary Policy Committee tomorrow, not one but two of the big four high street banks in the UK have announced that they can no longer afford to wait for interest rates to curb borrowing and are about to tackle the situation themselves. First HSBC and now Lloyd’s have announced that the rocketing levels of bad debts in the form of Bankruptcies and Individual Voluntary Arrangements are costing them too much, and that they will be forced to tighten their lending criteria to control the situation.

The effect of this, similar to interest rate rises, will be to curb borrowing amongst consumers, as high street banks will begin to offer less loans and overdrafts to people, slowing the vast supply of cheap money that has fuelled consumer spending in recent times. The banks simply can no longer afford to risk their profits by lending money out so easily. Considering that HSBC in particular has seen costs due to bad debts increase by 36% in the first 6 months of 2006, it’s not hard to see why this move has been made. Effectively the banks are taking matters into their own hands and doing the MPC’s job for it.

Further evidence of high inflation has been reported today by the British Retail Consortium, who have announced that shop prices rose at their fastest rate for two years in July. Some might say that this could tip the MPC into raising rates tomorrow, although they have ignored bigger problems in the past. Odds on a rate rise briefly hit 4-1 on Betfair today, although a rate freeze is still seen as the most likely outcome. It really is anyones guess.