Gordon Brown steps down

In a day of fast-moving developments, Gordon Brown has announced that he is stepping down as Labour leader and hopes that a new leader can be in place by the party conference in September: Brown

The announcement removes one major impediment to a Labour-Liberal Democrat coalition, but it may also encourage the Conservatives to try and seal the deal with the Liberal Democrats. Any 'rainbow' or 'traffic light' coalition would have a very thin majority. The case for a further election in the autumn would be strengthened by the fact that there would be another 'unelected' prime minister - although the British system is not a presidential one but seeks to elect a party to govern.

We can now expect manoeuvring to begin among potential candidates. David Miliband is the obvious Blairite candidate, but some think more highly of his brother Ed. Harriet Harman may be tempted to stand, but will Alan Johnson put his hat in the ring?

So we shall have a lot of political manoeuvring which will do nothing to tackle the problems facing the economy.