A year after Gordon Brown became Prime Minister, the Labour Party seems to have adopted the Gerald Ratner approach to its leader. Ministers, backbenchers, party activists all declare that the product is “crap” but they still want the voters to buy it at the next election.

It is impossible to get through a lunch at Westminster without conversation turning to the leadership. Over the starter, there is a discussion of the election that never was, with the main course an analysis of psychological flaws and when the coffee arrives it is time for a debate about who could take over.

“I can't find anyone who champions Gordon any more,” one Cabinet minister told me. “We all thought he'd have this big box of fireworks that he'd open and we'd go - wow'. But there was nothing. The leader needs a bit of swagger, it's not enough to be clever, you need some public appeal.”

Another senior figure says that there are too many “semi-measures” coming out of Downing Street. “Gordon says one thing to please the Left, another to please the Right but there's no overriding message.”

In the July edition of Progress magazine, Lord Giddens, the new Labour guru, joins the fray. “I do have to confess to feeling not only disappointed at, but angry about, the string of poor decisions that have put Labour in such a weak position today,” he writes. “I don't buy the argument that the Government is not responsible for its current situation, that it's mostly the fault of the big, bad global economy.”

And yet nobody is seriously considering an attempt to depose Mr Brown. They have decided that the risks of doing so outweigh the potential benefits. The party is therefore in danger of going into the next general election campaign in the worst possible position - with a leader who appears not to have the confidence of his own troops. “We're all doomed,” a Cabinet minister says. “We might as well ring the removal vans to take us out of office.”

But one group is not about to take defeat lying down. The wealthy donors who have contributed to the Labour Party over the past ten years did not get rich by backing losers. They are used to hiring and firing people in their professional lives and they are unsentimental about their politics too. I bumped into one rich businessman, who has given substantial sums to Labour, rushing into the House of Lords last week.

“I'm not going to give them any more money while Gordon Brown is leader,” he declared. “It's time for the next generation to take over.”

Another former donor admitted that he was deeply disappointed by the Labour leader's performance “He's just not up to the job,” he said. “Being Chancellor played to all his strengths but Prime Minister seems to bring out every weakness.”

One potential leadership candidate claims that three of the party's longstanding backers have telephoned him to say that they would start giving again if Mr Brown stands down. A group of Labour donors recently met to discuss whether Alan Johnson or David Miliband would be a more popular replacement. It is not just the Blairites such as the businessman Lord Hollick who are disillusioned. Brownites are losing faith too. Lord Paul, the steel magnate who has supported the Prime Minister for years, now tells friends that he does not think Mr Brown has what it takes to do the top job.

All this matters because the Labour Party is heading for financial meltdown. Even Ray Collins, its new general secretary, admits that its finances are in a parlous state. Mr Brown's preferred candidate to take charge of the organisation - David Pitt-Watson, a City fund manager - turned down the job because he did not want to become personally liable for more than £20 million of debt. Labour has until Monday to submit its accounts to the Electoral Commission. It is touch and go whether the auditors will sign them off. The party could still ask for an extension, rather than be declared bankrupt.

According to the latest figures from the Electoral Commission, large individual gifts to the Labour Party have almost completely dried up. More than 90 per cent of donations in the first quarter of this year came from trade unions. Party sources say that there have been some contributions in the past few weeks - including around £250,000 from Sir Ronald Cohen, the venture capitalist. But attempts to renegotiate a series of multimillion-pound loans after the cash-for-peerages affair, are not going well. One wealthy man with a loan outstanding has made it clear that he does not want to be “taken for granted”.

“He's invested in something, he can see it going wrong, he wants to know how it's going to be put right,” a friend said. Even Lord Sainsbury of Turville, one of Labour's most loyal and generous benefactors throughout the Blair years, now makes loans rather than gifts. The trade unions would certainly bail the party out but Mr Brown would be reluctant to find himself beholden to the brothers.

This puts the donors - or potential donors - in an extraordinarily powerful position. When Stuart Wheeler, one of the Tory Party's biggest benefactors, spoke out against Iain Duncan Smith it was the beginning of the end of his leadership. It is hard to imagine Labour taking orders from its super-rich paymasters - in fact, if the donors did go public with their concerns, their intervention could strengthen Mr Brown's position with MPs and activists who were always suspicious of Mr Blair's alliance with wealth. However, if the party suspects that the donors are reflecting wider public opinion, they could just tip the balance against the Prime Minister.

It is not only the country that is facing a credit crunch. “Follow the money,” Deep Throat tells Bob Woodward in the film All the President's Men. At the moment the money is running as fast as it can away from No10.

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