The government now believes, I'm told, that there are only three ways out of the current crisis - one they hope for, one they fear and a third they are ready to accept.

They are:

1. Eurozone leaders succeed in getting last week's deal back on track despite Greece's plan to use a referendum to secure a better deal

2. Greece leaves the euro

3. Enhanced IMF funding for the Eurozone's struggling economies

Reuters is reporting that China's deputy finance minister Zhu Guangyao revealed tonight that the third option is already under active discussion in Cannes in advance of the G20 summit.

The politics, here at home, are complex for a government pledged not to spend British taxpayers' money on propping up the euro.

However, Chancellor George Osborne has been very, very careful to leave himself room to do just that so long as it's via the IMF and given not to the Eurozone bail out fund but directly to individual countries.

In the Commons last Thursday, Mr Osborne reassured his backbenchers and won himself favourable headlines in the Eurosceptic press when he said: "Britain will not be putting money into the bail out fund either directly or through the IMF... the IMF exists to support countries, it does not exist to support currencies.

"The IMF contributing money to the eurozone bail out fund, no; Britain contributing money to the eurozone bail out fund, no. That is Britain's clear position."

However, with an eye to the future he added: "Supporting countries that cannot support themselves is what the IMF exists to do, and there may well be a case for further increasing the resources of the IMF to keep pace with the size of the global economy.

"Britain, as a founding and permanent member of its governing board, stands ready to consider the case for further resources and contribute with other countries if necessary."

If this happens the chancellor will stress that the increase in IMF resources will be used to help many countries outside Europe. True, but they would also be used to help quite a few inside too.

The Treasury is keen to stress the distinction between the taxpayer putting money into the IMF for use around the world, and giving it directly to the Eurozone.

It points out that the IMF has programmes in 53 countries - of which only three are in the Eurozone - and that no country who's lent money to the IMF has ever lost it.

Thus, they argue that saying that the British taxpayer will be bailing out the euro is like saying that Brazilian, Indian and Chinese taxpayers are doing the same.

Thank you for reading my blog. As of today it is moving to a new home, with a fresh format and that old cartoon gets replaced by a photo - which I'm not sure is wise for a bald man with bottle bottom specs but progress is progress.

Visit my new page to see all of my reports, analysis and musings in one place - including video, audio and news stories. Oddly, though the first to blog at the BBC, I'm being a little slow to adapt to tweeting - at the moment I just tweet my blog posts but I will endeavour to take the great leap forward soon. Those tweets will also appear in my new page soon.

Nick: We don't like cutting but the Tories do.

David: There's only one party you can trust on the NHS.

Brings a warm glow to your heart, doesn't it?

 

Clegg, you see, is rather more radical than some have recognised. In part, that's because of his strong European roots - he was brought up by a Dutch mother, worked in Brussels for the European Commission and then became an MEP. British affection for the NHS stems partly from memories passed down the generations of what health care was like before it was created and in large part from a comparison with American healthcare. From a European perspective the NHS doesn't look that special. After all you're not asked for your credit card before going to hospital in France or Holland.

No wonder then that Clegg signed up to the Orange Book - published in September 2004 - which proposed that the UK should adopt a Euro style health insurance model. His ally David Laws - who'll be back in the spotlight this week - wrote the chapter which observed that:

"The NHS is a system that fails to allow for the disciplines of choice, diversity and competition which can help to ratchet up standards"

The current NHS proposals were drawn up not just by the Tory Andrew Lansley but by his Lib Dem Deputy Paul Burstow. They were reviewed and approved not just by the Conservative Oliver Letwin but by Clegg's soulmate Danny Alexander. The foreword to them was signed not just by David Cameron but by Nick Clegg too.

So they are, to coin a phrase, all in it together when it comes to the NHS.

Both Cameron and Clegg realised too late the political danger of the reforms they'd agreed to. Both are now trying to reassure voters that they are not planning to privatise the NHS and to assuage the anger of hospital consultants and nurses who fear that GPs will not fund them as generously as politicians who, down the years, have found campaigns to keep hospitals open hard to resist. Both know NHS reforms that go wrong could destroy their personal as well as political reputations.

The battle is on for the credit for changes which - in broad outline if not all detail - have, I'm told, been agreed. After staging 100 meetings in which 10,000 NHS staff have been engaged I am told by a Tory source that it is a statement of the obvious that "no bill is better than a bad bill" but that "everyone expects to improve and not dump" the NHS plan.

Lest anyone read this blog as me suggesting that the Lib Dems are a threat to the NHS or that both Coalition partners are equally a threat let me be clear. I am not. Indeed, choice, diversity and competition are words that were used by previous Labour Health Secretaries who allowed private companies to provide not just cleaning or pharmaceutical but clinical services.

Ever since the NHS became a national religion politicians have competed to say that they love it more or can be trusted to save it. However, for more than two decades - ever since the Conservative White Paper of 1989 when Margaret Thatcher decided to keep the health service and not to dismantle it - debate has been about how much choice, diversity and competition it is possible and desirable to have within the NHS.

Update 17:00: Lib Dem sources insist it was their man - not the prime minister - who brought about the "pause" in the NHS reforms when he threatened to halt the Bill altogether if  David Cameron refused to review it.

In response to my earlier post they do not deny that Nick Clegg is a "health reformer" and you can see why. Thanks to The Independent for reminding me of an interview they ran in September 2005 in which Clegg - then his party's foreign affairs spokesman - said "I think breaking up the NHS is exactly what you do need to do to make it a more responsive service" and refused to rule out an insurance based model.

"I don't think anything should be ruled out. I think it would be really, really daft to rule out any other model from Europe or elsewhere. I do think they deserve to be looked out because frankly the faults of the British health service compared to others still leave much to be desired."

 

Just like the general election held exactly a year ago - today produced results no-one predicted with consequences which are totally unpredictable.

Many may have foreseen the drubbing Nick Clegg's Liberal Democrats would receive but few foresaw its scale - losing not just to Labour in the Northern cities, not just to the SNP in Scotland but - irony of ironies - to their coalition partners the Conservatives in parts of the South.

And who would have dared predict that David Cameron would be out tonight celebrating councils and councillors gained - if, that is, he hadn't decreed that his party must not be seen to gloat.

And all this before the final results of a referendum which looks certain to bring suppressed grins to Tory faces and further gloom to Liberal Democrats.

So what now for the coalition? The talk is of a more business-like, less chummy relationship; of some disagreements publicly aired rather than always privately resolved; of Liberal Democrats fighting - their chosen word - to avoid what Nick Clegg called this morning "a return to Thatcherism".

How will that work? No-one can possibly know. Just as no-one can know how the new Scottish government will manage with a parliamentary majority committed to delivering independence whilst public opinion shows no appetite for it.

David Cameron and Alex Salmond are the two clear winners of today but they may soon be pondering that old Chinese proverb - be careful what you wish for.

What is striking so far is that those councillors who lost in Sheffield and Liverpool and Hull gave their leader and the Coalition their backing. So too did backbench rebels Mike Hancock and Adrian Saunders...and Chris Huhne, who was widely thought to be "on manoeuvres" after his clash over the Cabinet table with David Cameron and George Osborne...and Tim Farron the party's president and young pretender.

So, for now the pressure is not for the Coalition to end or Clegg to go but for him to fight harder and more publicly for Lib Dem policies and against what he himself called this morning "a return to Thatcherism".

Stand by, therefore, for more Coalition rows on the NHS, on banking reform, on immigration and tax. Standby for less ministerial chumminess and more business-like negotiations.

Don't hold your breath though for a change of leader or an end to the Coalition.

Most Liberal Democrats will try first to prove - in Paddy Ashdown's words - that "compromise is not betrayal".

David Cameron must scarcely be able to believe his luck this morning.

A year after failing to win the general election and having announced deep and painful spending cuts he will be deeply relieved that - so far at least - his party has barely received a scratch from the electorate. Losses may still follow but on nothing like the scale once feared.

The reason is clear - it's his coalition partner who has absorbed all the pain. Nick Clegg will have watched in agony as his party headed towards its worst share of the vote in its history and as they were routed in the Northern cities he was so proud to control.

And then there was the surprise of the night - Scotland. The Nationalists' stunning series of results will bring them joy. They were, above all, a personal victory for Alex Salmond. He is re-shaping the politics of his country and dreams of going much further.

Which leaves Ed Miliband. Once all the results are in - he should be be able to celebrate the fact that Labour will govern Wales again, will have many more councillors and a greater share of the vote.

Yet his party will have their doubts when they see it is their enemies - the Tories and the Nationalists - who have the biggest smiles this morning.

"It's clearly a helpful development I don't necessarily think it will change any timetables but we should use it as an opportunity to say to the Taliban now is the moment to separate yourself from Al Qaeda to give up violence"

More significantly he stressed the possibility of a political deal with the Taliban rather than a military defeat.

"If we can therefore get a political reconciliation in Afghanistan, persuading the Taliban that now is the time to achieve the goals they have through political means rather than military ones then we could get a more rapid solution"

Mr Cameron was quick to deny he was looking at an earlier withdrawal, but nevertheless the political clock on our involvement in Afghanistan is ticking a little faster.

Others are better placed than me to analyse what this means for Al-Qaeda and for events in the Arab world. The politics of this news, though, seem pretty clear.

Obama was elected to end the wars in Iraq and Afghanistan. For many Americans the loss of life there was justified only as a response to the attacks on New York and Washington on 9/11. The talk of spreading freedom and democracy, improving the life chances of the residents of Bagdhad or educating Afghan girls - nation building in short - was never popular. The news of Bin Laden's death will, I predict, encourage many Americans to believe that the war which began on 11th September 2001 is finally over and that it is time their boys came home.

A President who some said could not be re-elected may soon look hard to beat. His political advisers are likely to want to seal this victory by ending operations in Afghanistan as soon as they can. It is Obama, just as much David Cameron, who will determine when British troops come home.

Obama has looked mightily reluctant to get drawn further into conflict in Libya or into new conflicts elsewhere. There is a danger for David Cameron that today's news increases that reluctance. 'After a popular victory why risk a defeat.' his advisers may ask.

The security challenges of 2011 - in Syria, Libya, Egypt Iran and elsewhere - have little to do with the man George Bush identified as his country's greatest enemy in 2001. Nevertheless, today's news of the death of Osama Bin Laden could have a profound effect on the decisions taken about the future.

I said there'd be no double dip/recovery.

I predicted/warned you, despite what the doubters said.

I've got the world's leading economic organisations/economists on my side.

Obama agrees with me/me.

I am right and you are wrong.

Today's growth figures do not and cannot prove whether George Osborne or Ed Balls was right.

What they will do is ensure that the political debate will not just be about how to tackle the deficit, but how to get the economy growing faster again.

For years politicians on all sides have told us that they want to see the British economy re-balanced - to become less dependent on financial services and the South East. A period of low growth, spending cuts and rising taxes may make those words sound rather less attractive than they once did.

Having praised the Grand Old Man as "obviously a brilliant man who did some extraordinary things for his country", the prime minister went on something of a contemporary riff telling me:

"The only problem with Gladstone" was that "there is something a bit sanctimonious, you know - I was going to say Paddy Ashdown with whiskers", before adding hurriedly "that's a bit unfair on Paddy Ashdown".

The interview was recorded not long after Paddy's all guns blazing amphibious assault on David Cameron for allowing the No campaign to target Nick Clegg personally. Ashdown, you may recall, was once the boss of David Cameron's Chief of Staff Ed Llewelyn - the two worked together in Bosnia - and still calls from time to time to pass on his views. Now that is one private conversation which, I suspect, did live up to the public rhetoric.

NR: Did David Cameron promise you that he would keep a low profile in this campaign?

NC: Look I don't want to go into conversations we have day in day out.

NR: You did - and I sense that he did- he's changed his mind.

NC: Look you're going to have to ask the Conservatives how they want to participate in the No campaign.

NR: To be fair, you see him every day and I don't - did he say to you.

NC: You ask the Conservatives, you ask David Cameron about that side of the story- as far as I am concerned, what I am not just me by the way- Ed Miliband, the leader of the Greens, the leader of the UK Independence Party - lots of people outside politics are all saying let's do something better - on the other side of the debate you have got the Conservatives, the BNP and the Communists - that speaks volumes about who is on either side of the debate.

I spoke to him after filming an extraordinary meeting in Abingdon near Oxford where the deputy prime minister spoke to local Lib Dems fighting to hold on to the council against a Tory challenge. One party activist expressed her concern that "I'm concerned, of course, like a lot of people about the public perception that you and David Cameron are coming closer and closer together and people can't see the difference between you." Another, a local Lib Dem councillor, told him that he was becoming "the butt of comedy" before asking him to widespread applause "Can you not have a slight argument with Mr Cameron?"

After the meeting I asked him whether there was a "phase two coming" for the coalition "where you think you can just take your jacket off and flex your muscles?" Yes, he told me, as the government carried on as "the manner of working together you know develops into a habit" then "of course people will start accentuating their differences just as much as you also need to decide on common policies for the national good".

NR: You said at the outset that it was responsible to work together and have your rows in private. Is there a phase two coming though where you think you can just take your jacket off and flex your muscles?

NC: Yes, I think inevitably as the government carries on, and sort of, the manner of working together you know develops into a habit if you like, clearly as you approach election times, and we're now in an election campaign period, people of course will start accentuating their differences just as much as you also need to decide on common policies for the national good.

Here are other extracts of what else he had to say:

Transcript extracts on AV:

NR: Paddy Ashdown has said to David Cameron - call the attack dogs off, do you agree?

NC: I think what we should do, what everyone should do on the Yes campaign and on the No campaign is at least treat people like adults. They don't want a mud slinging debate what they want to know is what is wrong with the present system - its deeply unfair, millions of people whose vote doesn't count and I think there is a strong case for AV particularly after the expenses scandal so politicians work harder for your vote - that is the simple decision to be made. Put it really simply if you want more MPs paying for duck houses then vote No, if you want a better politics vote Yes. That's my opinion and that's what I am going to be saying for the next few weeks.

NR: Your friend Paddy Ashdown, your friend, former leader says this is in danger of poisoning the mood in the coalition.

NC: I don't think for the remaining stages of this campaign it does anyone any good to replace simple, logical arguments about whether we actually improve the way we elect MPs so that MPs work harder for your vote with personal vitriol and mud slinging -I frankly don't think it will impress many people either. It is treating people like fools, people know they have to answer the simple question do you want the current system that produced the expenses scandal and all the rest of it, or do you want something better that's the question and frankly however much mud is slung that will remain the question until 5 May.

Transcript extracts on relations with Cameron and the Conservatives:

NR: Nick Clegg - there was one theme wasn't there (reference to filmed meeting) - they want you to have a row with David Cameron - these are your supporters...

NC: Yes well I think at election time it's inevitable isn't it. People want to get more tribal, they want to duff up the other side. It's a balance you need to strike in a coalition government, because clearly we are different parties, different leaders, different values. Always have been always will be, but you also need to work together in the national interest to thrash things out. So quite a lot of the differences and indeed arguments you have are necessarily arguments you have behind closed doors. But you know all my political life I've always believed you can have sincere differences with people, but still thrash out those differences in a civilized respectful manner rather than sort of mud slinging or hurling abuse at each other and that's kind of politics I am always going to try and stick to.

NR: Shouldn't you be a bit more like Vince Cable? I mean people know where he disagrees with David Cameron and they don't know where you do?

NC: I think they do actually. I think they do. You just need, you just have to look at the things I say week in week out where we clearly differ.

NR: Such as?

NC: If you look at things the Liberal Democrats have brought to this government, it wouldn't have happened without Liberal Democrats that we've now given a great tax break to 23 million base rate tax payers, that pensioners wouldn't have got a better deal that their pensions are now going up as of two weeks ago without Liberal Democrats. These are big big differences and we're not just making within the government but much more importantly we are making to people's everyday lives. But look, this is the first year in a five year Parliament. Where we are doing as a government really really difficulty things. Controversial things. Some downright unpopular things. If we don't do them, if we don't sort things out now we won't have a brighter better tomorrow that's why we're doing all this and I think it's right that in the coalition government we show, yes our differences, but that we remain capable of sorting out the country so it's better for future generations.

I travelled to Dover and Gravesend yesterday with Labour's leader - both places where Labour's vote collapsed by the end of its time in government. Asked why that had happened Mr Miliband said:

"I think the problem is that we lost trust and we lost touch particularly in the south of England. I think living standards is a big part of it, immigration is a big part too. I think maybe a combination of those two issues - most importantly."

I also asked him to respond to the comments of Maurice Glasman who he recently ennobled and who wrote in Progress magazine that "Labour lied to people about the extent of immigration and the extent of illegal immigration and there's been a massive rupture of trust."

He said:

"I don't think we lied but I do think we got it wrong in a number of respects. I think that first of all we clearly underestimated the number of people coming in from Poland and that had more of an effect therefore than we would otherwise have thought. And secondly, I think there's this really important issue about people coming into the country and the pressures on people's wages. People aren't prejudiced but people say to me look I'm worried about the pressure on my wages of people coming into this country, I'm worried about what it does to housing supply - all those issues. Now some of that is real and some of it isn't but I think you have to address not just tough immigration policy but underlying issues as well."

When I put to him Lord Glasman's suggestion that Labour had been "hostile to the English working classes" he paused and then changed the subject. My sense is that he may well share that analysis.

This is not the first occasion Ed Miliband has spoken of Labour mistakes on immigration. In his leadership campaign he spoke about the drop in people's wages due to the interaction of migration with flexible labour markets. But the timing of these comments - in the midst of an election campaign and just days after David Cameron's own pitch to limit immigration from outside the EU to the "tens of thousands" - and his unwillingness to challenge Maurice Glasman's critique makes them especially interesting.

The question is whether his promises of more training, apprenticeships and a living wage will re-connect Labour with the working class supporters who have abandoned it.

---

Here is the transcript of my interview with Ed Miliband:

NR: Southern seats seen massive drops in Labour support in recent years - what's the problem?

EM: I think the problem is that we lost trust and we lost touch particularly in the south of England. I think living standards is a big part of it, immigration is a big part too. I think maybe a combination of those two issues - most importantly. So that people were seeing people coming into the country, worrying about their own standards of living which weren't going up as they had been in the first part of the decade and holding us responsible for it.

NR: You mentioned immigration. A friend of yours, former speechwriter, Maurice Glasman said Labour lied to people about the extent of immigration?

EM: I don't think we lied but I do think we got it wrong in a number of respects. I think that first of all we clearly underestimated the number of people coming in from Poland and that had more of an effect therefore than we would otherwise would have thought. And secondly, I think there's this really important issue about people coming into the country and the pressures on people's wages. People aren't prejudiced but people say to me look I'm worried about the pressure on my wages of people coming into this country, I'm worried about what it does to housing supply - all those issues. Now some of that is real and some of it isn't but I think you have to address not just tough immigration policy but underlying issues as well.

NR: But as he said - and you know him well - as he said to you let's be honest about this Ed you lied about it?

EM: Well, err, the first time I saw it was when he said it - I don't think we did lie. I don't think that's the right thing to say.

NR: But did you mis-lead - if not deliberately. (EM interjects: no, no) Did people get the impression immigration was much lower than it turned out to be?

EM: Well no, I think people actually thought it was the opposite. I think what happened was that we thought there would be a certain number of people coming into the country from Poland - it turned out to be much larger - it did have an affect. And it's something I said very much during my leadership campaign. And look it's part of my leadership Nick - I'm not going to go round saying everything the last Labour government did was right - I think it was a good government, I think it made our country stronger and fairer in a number of respects but I think we got some things wrong as well.

NR: But his analysis and he used to write speeches for you - Labour were "hostile" to the English working classes - that you treated that anxiety about immigration as if sometimes it was racism or bigotry or ignorance and I sense you share a bit of that concern?

EM: Well, look I would say we, we, we did realise the scale of the problem. We talked about the points based system for immigration - we made that one of our key priorities. I think it's this mix of immigration and the impact on living standards. I think that's what.... we were still saying let's have flexible labour markets, maximum flexibility at work and that was, that was causing problems for people and that's why we need to re-think.

NR: But if your message to people is not look we don't want anybody to come to this country but we can help you in other ways what are you driving at with people? If they're saying to you we can't get jobs, I stopped a builder you passed there - we can't get jobs he said to me - I've been unemployed but I'm skilled. What is Labour saying to them if it's not saying we'll stop the immigration?

EM: Well let me give you a practical example, we said before the budget have a bankers' bonus tax and put the young unemployed back to work, get the housing industry moving, help support enterprise - practical differences, practical things that we could have done. I think the thing this government is getting wrong on immigration is that they've got big promises which I don't think are going to be matched by reality but they're not dealing with those underlying economic issues which I think caused a lot of the concern that people had.

"The personalisation of the No campaign is disgusting politics", he tells me before going on to condemn what he calls a combination of "Conservative Party money and the dinosaurs of Labour who are attacking the man holding the coalition together".

This follows the Climate Change Secretary Chris Huhne's warning on Newsnight last night that "gutter politics" and "downright lies" are damaging the coalition. He went on to say that "I am frankly shocked that coalition partners can stoop to a level of campaign that we have not seen in this country before". He was referring not to coded and not so coded attacks on Nick Clegg but the No campaign's claim that voting under AV would cost millions and that it would promote extremism.

Both men will have seen the latest poll - ICM for the Guardian - showing a dramatic 16% lead for the No campaign. It is just a poll and just one poll and, more than in most elections, turnout is the key to this contest. However, the trend in all polls has been no-wards.

If that is the result it will be one more reason for some Lib Dems to ask 'What are we getting for staying in the coalition?'

PS One or two of you have complained that I am focussing on the horse race rather than the substance of the referendum. Point taken.

More on this to come but, for now, I've been studying Professor John Curtice's analysis for the Political Studies Association of whether AV would make much of a difference. Having projected general election results since 1983 under AV his cautious answer is that it would make hung parliaments "a little more likely" and give a "modest boost" to the Liberal Democrats.

At the last election, for example, Curtice estimates that the Lib Dems would have got 80 seats not 57, the Tories would have got 20 fewer seats and Labour three fewer. This would still have led David Cameron to conclude that a Tory/Lib Dem Coalition was the only stable option. However, the alternative Lab/Lib Dem Coalition would have had an overall majority - 335 seats against the 315 they did get - which might have convinced some that a "progressive alternative" could have worked.

The one recent election outcome which could have been dramatically different and could have changed the country's political history was 1997 when Tony Blair would have got - at least if these calculations are right - a bigger landslide and, more importantly, the Lib Dems would have replaced the Conservatives as the second biggest party - getting 115 seats as against the Tories 70.

Update 12:10: Thanks to those who pointed out my schoolboy error. Curtice's study suggests that the Tories would have got 20 fewer seats under AV, not 20 extra seats as I originally said.

Update 13:08: Lord Ashdown has just gone much further. Whilst campaigning for a Yes vote in Bristol he challenged David Cameron to disassociate himself from what he called a "deeply and appalling personalised campaign":

"There are three questions for Mr Cameron. Will he now disassociate himself from a deeply personalised campaign of the sort no British prime minister of whatever party should be associated with? Secondly will he explain to us why the Conservative Party is now funding a campaign whose primary theme is to attack his main coalition partner? And thirdly if he wants to take a high-profile lead in this campaign let him do so in favour of a campaign on the basis of honesty and decency. I'd like to hear him make a commitment on that."

And here's the response from a No 10 spokesman:

(1) Will he now disassociate himself from a deeply personalised campaign of the sort no British prime minister of whatever party should be associated with?

The PM yesterday said: "I don't run the No campaign, I run the Conservative No campaign... I certainly don't condone any personal attacks on anyone in this campaign."

(2) Will he explain to us why the Conservative Party is now funding a campaign whose primary theme is to attack his main coalition partner?

As the PM made clear yesterday the Conservative Party is running its own NO to AV Campaign. This is focused on highlighting how unfair and unpopular the AV system is and why people should vote No; it is a system that is obscure, unfair and expensive and could mean that people who come third in elections end up winning. It is not attacking Nick Clegg.

(3) If he wants to take a high profile lead in this campaign let him do so in favour of a campaign on the basis of honesty and decency. I'd like to hear him make a commitment on that.

The prime minister is focused on making the argument against AV - it is a system that is obscure, unfair and expensive and could mean that people who come third in elections end up winning.