• Road to riches

    Taxpayers keep funding structures with big plans but who knows what efficacy, says Mandi Smallhorne.

  • Don't fall for Ponzi scams

    An expert unpacks the tell-tale signs to watch out for.

  • Inside Labour

    A smokescreen of misleading rhetoric won't make SA's problems go away, says Terry Bell.

See More

Cameron's fight has begun - experts

May 12 2010 15:47

Related Articles

Crisis a setback to euro adoption

UK refuses to back euro plan

FTSE recovers as Cameron takes charge

Markets anxious about UK govt

British stocks, pound see red


London - The hard work started on Wednesday for Britain's new prime minister David Cameron, and while some observers hailed the cooperation which saw him forge an unlikely coalition others predict a new election within months.

Cameron's Conservative Party and Nick Clegg's centrist Liberal Democrats have made Britain's first coalition government since World War II.

As well as cutting Britain's huge budget deficit, other items near the top of Cameron's daunting Downing Street in-tray include the Afghanistan war and a looming referendum on electoral reform.

The first few months of the new coalition will be crucial, politics expert Robin Pettitt of Kingston University in London said.

"If they are able to get through the first six months then trust between the leaders will build up and the backbenchers will get used to it," he said. "The longer they can go with cooperation, the stronger the trust will be".

Early splits could come on the economy, the key battleground of the general election.

Britain's deficit stands at £163.4bn, or 11.6% of gross domestic product - the highest level on record.

It emerged from its worst recession on record at the end of last year, and some experts fear a possible double-dip back into the red if there is not firm leadership to boost the economy.

But while the new Conservative 38-year-old finance minister George Osborne wants quick spending cuts in an emergency budget within 50 days, the Lib Dems have said they want to delay them.

Bleak legacy

"A series of grinding budgets will be necessary," the Financial Times said in an editorial. "That will stretch their new-found amity to the very limit. Containing the inevitable strains will require real leadership".

The bleak economic legacy could also damage both parties' future popularity.

Bank of England governor Mervyn King reportedly warned last month that the necessary austerity measures will be so tough that they will keep whoever implements them out of power for a generation.

Another potential stumbling block could be a referendum on electoral reform which the Conservatives offered the Lib Dems to woo them into government.

The Tories are set to campaign against a possible change from first-past-the-post to the alternative vote system which the Lib Dems will support.

"One of the things we don't know yet and will be crucial is referendum," Professor John Curtice of Strathclyde University said.

"If it were to be held sooner rather than later and lost, some of the glue between the two parties would be lost".

The new government also plans to set up a US-style National Security Council to manage the war in Afghanistan, on which the Conservatives are more hawkish than the Lib Dems.

Fair chance of survival

New Foreign Secretary William Hague described this as "our most urgent priority", adding: "We've been fighting some political battles here but they are in a real battle out there."

Amid signs of resistance from both party's backbenchers to the coalition deal, Hague said the government would introduce a law to secure five-year fixed term parliaments as a way of "locking this coalition together".

Liberal Democrat lawmakers will also be allowed to abstain from voting on a limited number of measures that the government will bring forward but they may not be happy with.

"Of course there will be people in both parties who quietly wish it hadn't happened," Hague told BBC radio. "In order to make a coalition work, on a small number of issues... we will resolve them in that way".

Experts say the new administration has a fair chance of survival but there may be choppy waters ahead.

"It's not going to be easy and I think both parties are going to have to manage their backbenchers," Pettitt said. "There may be trouble but it's looking reasonably stable".

But Bookmakers William Hill said many voters were already laying money on a fresh election by the end of the year. They have slashed their odds on this from 7/4 to 11/8.

"Punters believe that a coalition means trouble and that another general election is likely sooner rather than later' said spokesperson Graham Sharpe.

  - AFP



Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Add your comment
Comment 0 characters remaining

Company Snapshot

We're talking about:


Johannesburg has been selected to host the Global Entrepreneurship Congress in 2017. "[The congress] will ensure that small business development remains firmly on the national agenda and the radar screen of all stakeholders, the Small Business Development minister said.

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

People who fall victim to Ponzi scams are:

Previous results · Suggest a vote