Peter Jackson column

Jan 27 2005 By Peter Jackson, The Journal

A general Election campaign is already truly under way and we can look forward to four months of politicking.

I could be wrong about this (and fervently hope I am) but, if so, I seem to be in the majority.

It is worth asking why there should even be any question of a May 2005 election, when the Government shouldn't need to call one for another year.

Originally parliaments lasted for as long as the state or monarch wanted them to and the aptly-named Long Parliament clocked up 20 years.

This was clearly undesirable, so subsequent reforms limited their lives, first to three years, then seven and, in the last century to five.

But these were maximum terms and there has not been any attempt to stipulate that they should also be a minimum.

Given that the Government has the discretion to call an election at any time within the five-year term, why should Tony Blair consider asking for a dissolution a year early - assuming that he is. Some reports over the past week give some clues. First, as I have mentioned before, the weak state of the dollar should worry us. Caused by the USA's huge trade and budget deficits, it makes our exports expensive and hits manufacturing, apart from the damage it does to the rest of the world's economy.

There was an optimistic theory that central banks would not sell dollars wholesale, however bad an investment, for fear of precipitating a crisis. However, a survey of 65 central banks reveals that nearly half are cutting back on dollar holdings and this can only accelerate its decline.

Second, an Ernst and Young Item club forecast says the UK's budget deficit will hit £6bn in the current financial year, leading to tightening Government spending and tax rises, which will both hit the consumer.

Last, there is the inevitable fall in house prices, which will further hit the consumer's willingness to spend.

All in all, while this does not spell disaster, it means a less rosy economic outlook for 2006. In fact, perhaps the worst thing Tony Blair could do to Gordon Brown after the election is leave him at the Treasury to take the flack. And maybe the best thing for the rest of us would be to have fixed-term parliaments - like most other democracies - so governments can't cynically take advantage of the economic cycle.