There are fears that Martin McGuinness may resign as Deputy First Minister and bring down the Stormont Government if London takes back powers over the welfare crisis, it has emerged.

Mr McGuinness would have to recommend this nuclear option to his party's ruling council, the ard chomhairle, if he wanted to tender his resignation.

The ard chomhairle's decisions are binding on Sinn Fein.

Last week Mr McGuinness said he would make a recommendation but would not say what it was.

Now Sinn Fein has told other parties that he would ask to be allowed to resign.

If he resigned, the Executive would collapse unless Sinn Fein nominated a replacement, which seems unlikely.

It could, however, appoint a temporary replacement, in line with how Peter Robinson appointed Arlene Foster when he stepped aside to devote time to his family in the wake of the 'Irisgate' affair five years ago.

It is also possible the ard chomhairle would allow a period in which Mr McGuinness could try to negotiate with the Government for concessions while it was under pressure to stop the Assembly collapsing.

There is no doubt that Sinn Fein's preferred option would be for the Assembly to carry on without cuts being made.

But yesterday in the Assembly Sinn Fein's Mairtin O Muilleoir made it clear that his party would not act as "water carriers" for the Tories or implement austerity cuts.

Sinn Fein is particularly reluctant because it has pledged to oppose cuts if the party enters government in the Republic. At present the election is to be held there next year.

However, there is speculation that it may be held this autumn as Fine Gael, the main party in the governing coalition, is rising in the polls because of the improving economic picture.

If Mr McGuinness follows through with his resignation, it would mark a dramatic escalation of the crisis here. It would mean that Sinn Fein would be fighting an election in the South during a period of massive political instability in the North. There are a few hurdles before that. Tomorrow marks the first stage of the budget bill and, barring mishaps, it should complete its passage next week.

Then the problem of how to allocate the money will come. The £600m that Stormont does not have, and which the Assembly ignored yesterday, is roughly made up of £350m in debt and £250m in "internal pressures" - money in fixed costs like wages that have to be paid before April.

Most departments have been spending fairly normally and not putting money aside to cover the sort of emergency now enveloping Stormong. Running a surplus would risk it being allocated to some other department that needed money in the July monitoring round.

It is generally expected that departments will gradually start running out of money within the next few weeks. After that it is up to the Government, over whether it will extend loans or start to pull down the shutters on Stormont until the crisis is resolved.

Unless, that is, politicians find a way out. It won't be easy, but the incentive is that they will all end up out of a job if they don't.

Belfast Telegraph