Avoiding the electoral sideshow and the Chancellors' debate, we still face a situation potentially as severe as Greece. Bill Gross at PIMCO has warned that Britain faces a debt trap. The timing of such a trap is hard to pin down due to the long-term roll-over of gilts, compared to other government securities.
As the debate showed, a medium term reduction in government spending will be required, whoever wins the election. The reduction already signalled will need to be more savage than indicated to the electorate. The alternate is a market reaction and 'gilts strikes'.
Greece has already reached that stage and the EU has been unwilling to provide a Houdini for its member. Should we bet on the drachma by 2012?.