Brown to Call May 6 U.K. Vote as Polls Indicate Hung Parliament
April 6 (Bloomberg) -- British Prime Minister Gordon Brown will today call an election for May 6, setting up his first nationwide test as U.K. leader in a ballot that may fail to result in a governing majority.
The 59-year-old premier will travel to Buckingham Palace at about 10 a.m. to ask Queen Elizabeth II to dissolve Parliament, enabling him to call the vote, campaign aides with Brown’s Labour Party said. He’ll then make the announcement at his 10 Downing St. residence in London.
Conservative opposition leader David Cameron’s poll lead over Labour, which he’s held since late 2007, widened to 10 percentage points from 2 points last month, according to YouGov Plc. In contrast, an ICM Ltd. poll published late yesterday showed Brown trailing by 4 points, enough to make Labour the biggest party in the House of Commons.
“I’m struggling to think of a modern election when we’ve had this degree of uncertainty,” said Stephen Driver, who teaches politics at Roehampton University. “It’s going to see- saw backward and forward far more than previous elections. People want a change but they’re anxious about change as well.”
The vote may determine how quickly Britain reduces a record budget deficit and trims a national debt that is set to almost double. Brown says curbing spending too quickly risks a “double-dip” recession. The Conservatives plan immediate cuts. If the election fails to result in either party having a majority, the first so-called hung parliament in 36 years, economists and investors say it might be too weak to fix the U.K.’s finances and may put the top-grade credit rating at risk.
‘Hate Uncertainty’
“The markets hate the uncertainty of the possibility of a hung parliament or the possibility of the political parties having to work in a coalition,” said Mark Wickham-Jones, professor of politics at Bristol University. “If no one is in overall control, it will make cutting the deficit difficult because the politics will push it to one side.”
The pound has fallen 23 percent against the dollar since Brown took office almost three years ago, and more Britons dropped out of the labor market in the three months to January than at any time since records began in 1971. Labor unions have stepped up strikes, with cabin crew at British Airways Plc walking off their jobs last month.
Labour has governed Britain since 1997, when Tony Blair unseated John Major, ending the Conservatives’ 18-year run that began with Margaret Thatcher’s election. Brown, Blair’s finance minister, replaced his boss in June 2007.
‘Road to Recovery’
“The people of this country have fought too hard to get Britain on the road to recovery to allow anybody to take us back on the road to recession,” Brown will say today, according to excerpts released by his office.
In the first three months of the year, Brown closed a gap in the opinion polls since a survey in September 2008 -- during Britain’s longest recession on record -- showed him trailing by as much as 28 percentage points. On Feb. 28, a YouGov poll had him 2 points behind. The Conservatives have widened their lead since then after saying it would cancel most of a payroll-tax increase proposed by Brown.
Imbalances in the distribution of votes mean vote share doesn’t automatically translate into seats, as Labour benefits from lower turnouts in its districts. Calculations by Colin Rallings and Michael Thrasher, professors of politics at Plymouth University’s Elections Unit, suggest the Conservatives would have a two-seat majority, based on the 41 percent to 31 percent lead in a YouGov poll in today’s Sun.
Labour would have the largest bloc if ICM’s numbers, which has Brown’s party trailing by 33 percent to 37 percent, prove correct, 10 seats short of a majority.
A hung parliament in which no party has a majority might leave the government dependent on the third party, the Liberal Democrats, or Scottish and Welsh nationalists.
‘Tight Election’
“It’s going to be a tight election,” Cameron said April 4. “We are fighting for an overall majority, we think that will be best for Britain. We think a hung Parliament will be damaging, the uncertainty will be bad for Britain.”
Brown’s term has been marked by setbacks: a last-moment retreat after signaling he would call an early election in 2007; the reversal of a tax increase on low-wage earners; a warning from Standard and Poor’s that Britain’s top-grade credit rating was at risk because debt might reach 100 percent of gross domestic product; failed mutinies by Labour lawmakers and the deepest global economic slump since the Great Depression.
While Brown won plaudits for helping forge a coordinated global response to the financial crisis -- Nobel laureate Paul Krugman suggested Brown had “saved the world” by preventing a run on banks -- Cameron has criticized his economic management.
Darling’s Deficit
The deficit -- forecast by Chancellor of the Exchequer Alistair Darling in his budget March 24 to reach 163 billion pounds in the year through March 2011, or 11.1 percent of gross domestic product, -- became a flashpoint even before the official start of the campaign.
While Darling reduced planned borrowing, he gave no details of how Labour plans to cut the deficit, beyond saying there would be efficiency savings, amounting in 2012-13 to 11 billion pounds out of total spending of 730 billion pounds.
Conservative Treasury spokesman George Osborne said March 29 his party would cut spending by 6 billion pounds immediately and cancel part of a proposed employment-tax increase.
U.K. government bonds have returned 1.5 percent this year, compared with a 1 percent gain for U.S. Treasuries and a 2.8 percent advance for German bonds, according to Bank of America Corp.’s Merrill Lynch indexes.
The gilt market will remain “vulnerable to further bouts of volatility” until there’s clarity on the deficit-reduction plan, Michael Amey, who oversees U.K. fixed income in London at Pacific Investment Management Co., said after the budget. “The last years taught investors not to take guidance on ‘intentions’ as a guarantee of future action.”
Bank of England
The Conservatives have pledged to undo many of Brown’s changes to financial regulation, which they say failed to prevent the collapse of several banks. They would make the Bank of England the main regulator, incorporating the Financial Services Authority.
Brown frequently says his background as the son of a Church of Scotland minister underpins his political views, giving him a sense of morality, a duty to help the poor and a strong work ethic. A graduate of Edinburgh University, he entered Parliament in 1983. After Blair took power in 1997, Brown remained chancellor and premier-in-waiting for 10 years.
The prime minister’s time in office has seen repeated accusations about his character, and in February he denied allegations in a book by journalist Andrew Rawnsley that he had bullied members of his staff and instructed officials to undermine Darling.
Laser Printer
Still, the prime minister has hurled pens and even a stapler at aides, according to one official, who said last year Brown had once shoved a laser printer off a desk in a rage. Brown said in an interview March 26 Darling would stay in office if Labour wins.
Since becoming Conservative leader in 2005, Cameron has worked to shake off criticism that his upbringing means he doesn’t understand ordinary people’s concerns. The son of a stockbroker, he went to Eton, Britain’s most famous private school.
Cameron, 43, a former director of corporate affairs at London-based media company Carlton Communications Plc, has been a lawmaker since 2001. If he wins, he’ll be the youngest premier since the Earl of Liverpool in 1812.
‘Black Wednesday’
Before becoming a member of Parliament, one of Cameron’s jobs was as an adviser to Norman Lamont, who was chancellor on Sept. 16, 1992, “Black Wednesday,” when the U.K. withdrew from Europe’s exchange-rate mechanism after spending 27 billion pounds in a doomed effort to halt a run on the pound.
There’s been only one hung parliament in Britain since World War II. That was in February 1974, when Conservative Prime Minister Edward Heath called a snap election after a strike by coal miners seeking higher pay led to power shortages, and the government put the country on a three-day working week.
Even though the Conservatives won the largest share of the vote, Harold Wilson’s Labour Party took most seats. Heath attempted to stay in power and held unsuccessful talks on forming a coalition with the Liberal Party. He resigned four days after the vote, allowing Wilson to form a minority government that lasted until new elections in November.
source: bloomberg.com
