Tories withdraw support from the gilt market
Stephanie Flanders has written a fascinating piece about the Tories' attempt to cut just enough, were they to win office, such that the Bank of England won't feel minded to increase the cost of money.
She asks whether David Cameron's apparent desire for a negotiated entente with the Bank of England would taint the central bank's hard-won independence.
But there's another more immediate risk from what has been widely seen as a watering-down of the Tory leader's determination to make a decisive start in cutting the UK's ballooning deficit (which you may have seen on BBC News in an interview with me last Thursday in Davos): will it give the willies to those who lend to the British government?
Because - as you probably don't need telling - there are investors who believe that decisive action to reduce UK public-sector borrowing is needed sooner rather than later.
And any concern that investors may have at the current government's preference for both deferring cuts and resisting the temptation to say precisely what would be cut has hitherto been allayed by their conviction that the belt-tightening Tories would win the election in the spring and do what's necessary.
Arguably, it was investors' confidence that the axe-wielding Conservatives would triumph that has made it easier and cheaper for the current government to borrow the record-breaking sums it needs in the gilt markets.
Alistair Darling would deny that he's been leveraging the fiscal credibility of the Tories, but not all analysts would agree.
So what if the Tories are no longer quite so fiscally credible?
What if the Tories would cut the deficit slower than investors deem essential? What then?
It is still the painful case that a record-breaking £200bn-odd of gilts has to be sold this year and next.
In theory, if the Tories are slowing the repayment profile for the national debt, the interest rate the government pays on those gilts would rise.
It's probably also worth pointing out at this juncture that the Tories' lead in opinion polls over Labour has also narrowed, so they're not quite the shoo-in they were to win a decisive result in the election.
Also, it is an intriguing moment for the Tories to be muddying their position on when to cut the debt.
The innocent explanation is that it is a response to growing and widespread fears that economic recovery in the UK is far from robust or entrenched - so Messrs Cameron and Osborne would not want to be seen to be killing off the buds in a sharp frost of public-expenditure reductions and tax increases.
But among bankers and investors it's the world-leading scale of Britain's indebtedness that is nearer the front of consciousness. If anything, the bigger risk to the UK right now is a crisis of confidence in the financial community about the credit-worthiness of the UK.
To be clear, there is no direct read-across (to use the dreadful business cliche) from Greece's acute difficulties in borrowing: the UK's finances are in better shape than Greece's, the UK economy is more flexible than Greece's and there isn't international pressure on the UK to improve the accuracy and reliability of government book-keeping.
That said, at Davos, for example, perhaps the biggest talking point was McKinsey's epic study of the respective debts of major economies, "Debt and Deleveraging".
This is not pleasant reading if you're British.
It shows that - of the world's biggest and richest countries - the UK and Japan are far-and-away the world's most indebted countries.
This is on the measure that adds together the debts of households, companies, government and financial institutions, and then compares that sum with GDP, or what the country produces.
On that basis, in 2008, the UK's debt to GDP ratio was 469%, the highest in the the world, compared with 459% for Japan. The ratio of heavily indebted America was "just" 300% in US.
Arguably, the foreign lending of our very international banks should be excluded from the calculation. But even on that basis, the UK's debt-to-GDP ratio was 380%, so still considerably higher than any other big economy other than Japan.
Now McKinsey points out that our debt-to-GDP ratio fell a smidgeon in the first half of 2009. But not enough to be statistically or economically significant: on the unadjusted numbers, UK-debt-to-GDP was 466%, compared with 471% for Japan.
Now the degree to which we should be worried about that depends on considerations such as whether the size and international nature of our banking sector is a source of concern or celebration, and whether the UK's relative housing scarcity means that a massive rise in housing-related debt over the past decade is sustainable.
McKinsey's main thesis however is that slow economic growth is an almost inevitable consequence of high relative indebtedness.
It gives detailed empirical form to an argument you'll have read here many times over the past couple of years.
And it's very much at the forefront of policymakers' thinking - as shown in an address given last week by Andy Haldane, the Bank of England's executive director for financial stability.
Mckinsey's analysis is also explicitly cited by Bill Gross, managing director of the leading bond investor, Pimco, in his February Investment Outlook - which has attracted a bit more attention than normal and says:
"The UK is a must to avoid. Its gilts are resting on a bed of nitroglycerine. High debt with the potential to devalue its currency present high risks to bond investors" (for gawd's sake Bill, say what you mean).
Certainly not all bond investors are as down on Britain as Mr Gross. But with the ratings agency, S&P, last week nudging down the "industrial" credit-rating for British banks, it would be fair to say that there's a degree of nervousness about the future course of the
pound and British government bonds.
And there's particularly high anxiety for those who believe that the main prop to demand for gilts has been the Bank of England's Quantitative Easing programme to buy £200bn of them.
Now if you were a conspiracy theorist, you would note that David Cameron's change of tone on debt-reduction coincides with what will probably be the most important financial decision this side of the general election - that is whether the Bank of England will stop buying gilts.
If he has made the fiscal position of a future Tory government less clear, he has made the Bank of England's decision on whether to withdraw support for the gilt market that much more complicated.
And - you could argue - that Mr Cameron has increased the risk that investors will stop lending to HMG or demand much more onerous terms.
Which, of course, would upset him, but perhaps his personal pain would be rather less if any sterling crisis were to happen before the general election.
By the way, and to state the obvious, if David Cameron has postponed the date when a Tory government would cut the deficit, that may put pressure on the troika of leading rating agencies to bring forward their reviews of whether the UK should keep its AAA rating for sovereign debt.