On the one hand it has vindicated much of the criticism that Anglo-Saxon economists have made against the euro since its inception; on the other, it could plunge the British and wider European economies back into an even deeper and more painful recession.

Ironically, it was the success in the last televised debate of the most likely next British prime minister, Conservative Party leader David Cameron, that could condemn him to drink deep of the poisoned chalice that lies in store for the next British leader.

Chicago economist David Hale (a friend of this columnist; we had dinner together only last week) has cast something of a pall over the British scene by indiscreetly recounting a recent conversation he had with Mervyn King, governor of the Bank of England. According to Hale, King said that so deep and savage were the public spending cuts that any incoming British government would have to impose that it would keep his party out of power "for a generation."

It may be worse than that, because of Cameron's success in the final debate.

He stopped in its tracks the hitherto extraordinary rise of the appealing young Liberal Democrat Nick Clegg with two well-aimed blows. With the first, he denounced Clegg's proposal for an amnesty for the uncounted number of illegal immigrants in Britain. With the second, he reminded the most eurosceptical voters in the European Union that Clegg was the EU's most passionate fan in British politics and that he favored dropping the British pound and joining the euro.

With Greece on the verge of a default on its debt, the Germans stubbornly resisting any realistic rescue and Portugal and Spain starting their own slides into similar disaster, this wasn't a week for a British politician to advocate joining the euro. And much as Clegg protested that he would only do so "when economic conditions were right," the damage was done. For all his fresh appeal in the face of the two unpopular old parties, Clegg's association with the euro and the amnesty have hurt him.

But the harsh mathematical realities of the British election system now dominate the future. The latest opinion polls suggest Cameron has 33 percent of the vote, with Labor and the Lib Dems at level, pegging 28 percent each. That won't be enough to give Cameron a working majority in Parliament.

Indeed, such an outcome would produce the monstrously unfair result of making Labor the largest party (because its votes are spread in such a way that gives them so many seats) and reducing the Lib Dems to a rump. The BBC's computer calculates that such an outcome in votes would result in a parliament of 270 Labor members of Parliament, 267 Conservatives and a mere 84 Liberal Democrats.

This is where the nightmare begins, since 326 seats are required for a majority. As incumbent prime minister with the largest number of seats, Gordon Brown would remain in Downing Street and seek to negotiate a deal with Clegg for Lib Dem support. At the same time, Cameron would also be negotiating with Clegg on the terms for Liberal support.

There is a deadline: May 25, the date of the Queen's Speech, when the government in power has to outline its political agenda for the coming year and subject itself to a vote. If Cameron reaches a deal with the Lib Dems, Brown could be thrown out by losing an early vote of confidence before May 25. If Brown (or another Labor leader) reaches a deal with Clegg, Labor would remain in office and then have Lib Dem support to win the vote on the Queen's Speech.

Either way, precious time will be consumed. And while British politics may unfold in a stately, ponderous way, the financial markets operate by a more urgent clock. As the results become clear Friday, the pound is likely to come under pressure. If there is no deal by May 10, that pressure will intensify and the ratings agencies may carry out their threat to cut Britain's credit status to less than AAA.

At that point, the markets will note that Britain has a budget deficit that rivals that of Greece and that its national debt is soaring unsustainably. Britain must raise close to $100 billion in the world's bond markets this year and the risk is that investors will go on strike, as they did when Italy tried to sell a bond last week.

Even if the Lib Dems reach a speedy deal (unlikely), a hung Parliament would lead to a kind of coalition government, with no clear dominant party and a prime minister constantly having to satisfy two different party blocs. Given the perilous state of the British economy, that could provoke a very swift and deep fall of the pound, forcing higher interest rates (if the markets would lend Britain money at all) and an instant financial crisis.

Interest rates would have to rise, not to the dizzy heights of more than 25 percent that Greek 2-year bonds reached last week but to somewhere above 5 percent. That would produced an instant jump in mortgage rates and a housing crisis, provoke a wave of bankruptcies of companies that are now clinging on to life and an appeal to the International Monetary Fund.

And meanwhile the Greek crisis continues and interest rates in Portugal and Spain are rising ominously.

Remember that the Great Depression of the 1930s had two triggers: There was the stock market crash of October 1929 followed by what seemed to be a modest recovery. And then in 1931 the government debt crisis hit and the Great Depression was under way.

That is the worst-case scenario. But there are few rosy ones that could result from the very great likelihood of a hung Parliament in Britain this week.

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