It is ironic that financial markets seem jittery over the fiscal consequences of a hung parliament because the Liberal Democrats, who could hold the balance of power in such circumstances, actually have the most detailed deficit reduction plans of all three main parties.
The party's Treasury spokesman, Vince Cable, has proposed scrapping Trident, a civil service pay freeze, abolishing regional development agencies and reducing tax credits for wealthier families – cuts considerably more extensive than anything Alistair Darling or George Osborne have yet dared to present to the public. The Liberal Democrats have even stepped back from one of their most cherished and popular policies – scrapping university tuition fees – in deference to the bleakness of the fiscal outlook.
The Liberal Democrats agree with Labour that the pace at which these cuts are made must depend on the ability of the economy to bear them, but anyone who believes that this is a party of diehard high spenders has not been paying attention. Nevertheless, Mr Clegg is sensible to attempt to use every opportunity to get this simple point through to the financial markets.
The Liberal Democrat leader is also sensible to avoid speculation on the subject of possible future coalitions, as he does in his interview today with this newspaper. This is an old elephant trap. Labour and the Tories would like Mr Clegg to signal his preference so they can tell the electorate that a Liberal Democrat vote would effectively be a vote for either of the two main parties – indeed they are already attempting this. The two big beasts still hope to squeeze the third party into irrelevance. Mr Clegg is sensible not to play along. There is nothing to be gained for the Liberal Democrat leader in these hypothetical games, especially while there is so much uncertainty about the outcome of the election.
The polls point to a hung parliament but the extent of Liberal Democrat influence would depend on the shortfall of seats for the largest party. It is possible that the third party could have sufficient seats to allow a minority Conservative government to function, but lack the numbers to do the same for a minority Labour administration.
Much will also probably depend on the popular vote. Mr Clegg would find it difficult to support a Labour Party that had won fewer votes nationwide than the Conservatives, despite Labour's commitment to hold a referendum on electoral reform, one of the Liberal Democrats' long-standing objectives. And there are so many unknowns swirling around, from the turnout to the importance of marginal constituencies, that there is an unusual degree of uncertainty over how these polls would translate into seats.
All this is premature from Mr Clegg's point of view. The Liberal Democrat leader's focus, for the moment, needs to be on maximising the party's vote and retaining, or winning, as many seats as possible. Mr Clegg has a tantalising opportunity to spearhead a breakthrough for his party. This could be an election that changes Britain, unequivocally, into a three-party political system. The political fates are smiling on Mr Clegg. The televised election debates will give him far greater exposure than any of his predecessors have enjoyed in a general election campaign. For the moment, Mr Clegg is playing a promising hand shrewdly.