Is the idea of an IMF intervention in Britain fact or fiction?  Simple answer: fiction, on just about every level.

First, Ken Clarke (endorsed later by George Osborne) said that if Britain couldn’t form a government the IMF would have to step in to impose a budget deficit reduction strategy. Ken Clarke and George Osborne may be many things, but they are clearly not scholars of international law and governance. The IMF cannot step in and impose anything without being asked by a government to lend it money – they are not some sort of World Government (despite the wilder fantasies of some ultra-leftists and conspiracy nuts). So the whole premise of the statement that if we have a hung parliament and can’t form a government, the IMF will step in, is complete nonsense.

Second, would the international markets go into complete panic because Britain had a hung parliament and took one or two weeks to sort out a government? Hardly. All the main parties are committed to reducing the public deficit over a reasonable time-frame and to reasonable levels, in the eyes of the markets, so why on earth would they panic? Whatever government finally emerged would be committed to public expenditure and deficit reduction plans that would broadly be acceptable to the markets.

Thirdly, the idea that our politicians would be incapable of forming a government is equally ludicrous. They might not like it, they will certainly squabble for a while, but they would all know that too much brinkmanship would fatally damage them politically in the eyes of the voters. Sooner rather than later they would have to accept the voters verdict that they don’t want one-party rule any more, but something different.

Ken Clarke is old enough and wily enough to know all this, even if George Osborne doesn’t. Ken was clearly just trying it on to create a little flurry of fear. George Osborne ought to have had the sense to play it down – the sort of thing that really scares markets is the idea we might end up with a Chancer Chancellor – Mr Osborne should be careful he doesn’t acquire this label.