Dan Hannan (Glenn Beck’s favourite Brit) once again hits the nail on the head on the issue of the Hung Parliament and Cameron’s offer to Clegg and the Liberal Democrats of concessions in return for their support of a minority Tory administration. Some of the “purists” like Delingpole, Heffer and Tebbitt decry this move as a classic surrender to the left revealing Cameron in his true colours as a pseudo liberal “wet”in the Edward Heath mould. Promises of more tax cuts and less tree hugging, they claim, would have produced a solid majority paving the way for the restoration of the Thatcher legacy.

Only one problem with that scenario. “Read my lips – lots of tax cuts” constantly proclaimed during the campaign would have been revealed as a huckster’s lie once the first post election budget was announced because Brown’s regime has left us with a massive deficit.

While we’ve been snarled in our domestic quarrels, Greece has been falling to pieces. Unless we take immediate and drastic measures, we might find ourselves in the same position. Our deficit is projected to overtake Greece’s next year, and our economy has until now been propped up, at least in part, by the markets’ confidence that a new government would bring spending under control.

Tough decisions need to be taken. There will probably have to be public spending cuts plus some tax increases – not as traumatic as those to be imposed on Greece but unless implemented now we could find ourselves in a Greek scenario by 2011.

Hannan also sees some overlap in Conservative and Liberal Democrat policies

Both parties, meanwhile, want to scrap ID cards and reverse some of the more statist legislation passed by Labour in the guise of anti-terrorism measures. Both agree that our political system needs renewal. Both want recall mechanisms, popular initiative procedures, reform of the Upper House, fewer MPs, a shift in power from Whips to backbenchers and from executive to legislature. These things would have a far more tangible and benign impact on our political system than proportional representation.

As for tax, I rather agree with the Lib Dems that, when cuts become possible, they should first be directed at low earners. My guess is that most of my fellow Conservatives sympathise: lifting the poor out of tax, as Lords Saatchi and Tebbit propose, would do more to incentivise work than any number of tweaks to the benefits system.

The markets could possibly hold for a day or two waiting for a Con/Lib deal to be sealed but the longer the delay the greater the danger.

Back to the UK. Any falls in sterling, gilts or the FTSE 100 today ought to be modest. But what investors do not want to see is any sign that this is 1974 redux. The longer things drag on, the more likely that becomes, raising the risk of bigger falls.

Fortunately, although Brown is still clinging by his fingernails to the doorknob of Number 10, Downing Street, some Labour MPs are becoming increasingly embarrassed by his refusal to accept reality.

Another former minister, George Howarth, said that ”the maths” were against Labour being able to form an administration and that David Cameron should now be given his chance.

He said: ”I think the proper thing to do, in the interests of the country and in the interests of the Labour Party, is for the Conservatives to form a government, for us to be the Opposition – and be in opposition in a constructive way and where anything the Conservative Party puts forward is in our view in the national interest, to support it.”

…..and so the clock ticks……