In reply to Richard J:
> (In reply to Oliiver)
> No-one knows, of course, but my bet is on a Labour majority that will be quite a lot bigger than conventional wisdom allows. Labour will campaign on the question - "are you better off now than you were 5 years ago", to which the answer will be no, despite the resumption of growth. Real GDP per person is still more than 5% below where it was six years ago, after the worst economic recovery this century. Growth now is welcome but there's a huge amount of ground to be made up, and given the population is growing at about 0.6% a year you need that much growth just to keep per capita GDP constant.
>
> The big difference this time round is the fixed term parliament. 5 years is a long time to have a government; the Coalition is already looking like it's run out of steam, with growing squabbling between the partners and more and more difficult decisions being put off till after the next election. By 2015 the government will look tired and fractious. The other consequence of a long government is that the consequences of all the mistakes the government made at the beginning will be coming home to roost - the botched NHS reorganisation, the unfolding universal credit fiasco, the slow-motion disaster that is its energy policy. In past times a government like this would have stoked a short-lived economic boom and gone for an early election, but they haven't left themselves that option.
Interesting analysis. Something else springs to mind. If unemployment drops below 7% the BoE will consider putting up interest rates. It's possible that unemployment could dip below 7% in the next few months. If this does happen and interest rates start to go up there will be a considerable "feel bad factor" amongst mortgage holders which will hit the tories harder than any other party.