David Cameron is likely to stay in Downing Street, according to the attendees at last night’s ‘The View from The Bridge’ debate on the General Election, held at Newgate Communications. After a lively and informed discussion led by the three speakers – Anne McElvoy (Public Policy Editor at The Economist), Peter Riddell (Director of the Institute for Government) and Melanie Baker (Senior UK Economist, Morgan Stanley) – the audience were asked to vote on who they thought will be the Prime Minister by the time of the Queen’s Speech.
Nearly 70% said it would be Cameron, slightly more than a quarter plumped for Ed Miliband while there were a couple of left field suggestions – Alex Salmond and Boris Johnson!
However, though David Cameron could still retain the keys to No 10 after one of the tightest and most closely fought General Elections in a generation, the view was that it will be the SNP, not the LibDems or even UKIP, that could be king maker.
In a wide ranging discussion – which brought in German grand coalitions, Ramsay MacDonald and Grand Theft Auto – all the panellists agreed with Bill Clinton’s analysis that the key election issue would be ‘the economy, stupid’.
Despite City jitters about a potential Miliband government, the panel agreed that fiscal tightening would look broadly the same under either the Conservatives or Labour, the unknown is the impact on household finances, with income tax and VAT the only routes open to either side when it comes to raising substantial additional revenue.
Melanie Baker argued that the economy could see GDP reduced and growth slowing to around 1.9% next year if fiscal tightening is front-loaded to the early years of a new Government but the panel argued that the economic recovery in the UK is strong enough to weather it. However, she said the markets would be agnostic about the result as long as one of the two main parties was firmly in control.
The ‘bear’ case would emerge if a fringe party wins sufficient votes to hold a defining role in a coalition, with neither UKIP or the SNP signed up to the same fiscal tightening as the main parties and economic volatility and equity market falls being a likely result.
While much has been made of the pressure that the Conservatives face from UKIP and the challenge they could face in assembling a coalition in the face of a strong result for the SNP, the panel urged that the ‘staying power’ of an incumbent prime minister should not be overlooked.
However, while they saw reason for the Tories to be more optimistic they saw no room for complacency as a coalition or minority Government is the most likely outcome.
While all panellists believe a coalition is the option most parties will prefer, as they seek almost any route to avoid a second General Election, Peter Riddell argued that a minority Conservative government may opt to call the other parties’ bluff and seek to get their Budget through at a Commons vote.
Equally a Labour minority government would want to avoid having a coalition with the SNP to avoid giving the Scottish nationalists extra legitimacy ahead of the Scottish elections in 2016. However it might try to govern with a Confidence and Supply arrangement, where the SNP agrees to support Labour on certain crucial votes, followed by another election as they seek a governing majority.
The role of the Liberal Democrats was also scrutinised, with Anne McElvoy noting that Cameron and Clegg have so far avoided attacking one another as they may ‘feel they can go again’ and enter a second coalition government together. However Labour certainly would not want to be in a coalition with a party led by Nick Clegg.
Peter Riddell argued that despite ideological differences this could be better for the Liberal Democrats. He argued that it is more desirable for the Lib Dems ‘to be the heart in a Tory coalition than the head in a Labour one’.
Anne McElvoy, who has studied German politics in depth, suggested there was little precedent or appetite for an Angela Merkel-style German-style “Grand coalition” of the main parties.
Regardless of the outcome all agreed that it will be a very close election with some ‘strange results’. Expect to see some MPs getting in with around 35% of the vote and higher than average voter turnout – the key will be in which constituencies those voters turn out. Precedents including Harold Wilson’s victory in February 1974 and the first Ramsay MacDonald administration, which lasted for under 11 months during 1924, were cited.
Whatever the result, the panel argued that the 2015 General Election is a staging post – the real battles will come in the 2016 Scottish Election, the EU Referendum and at the 2020 General Election when both main parties will be seeking an absolute majority – potentially with new party leaders.