UK election – a race to the bottom?

November 13, 2014

Britain's opposition Labour Party leader Miliband speaks at the CBI annual conference in London

The theme of both Britain’s main political parties behaving like they want to lose next May’s election continues.

Recent headlines have focused on a possible attempt to unseat Ed Miliband as opposition Labour party leader. There are reasons to do it – an Ipsos Mori poll yesterday showed only 13 percent of the electorate think he would make a plausible prime minister and also gave the Conservatives a lead for the first time in a long time – but there’s no smoking gun so far.

David Cameron isn’t doing much better. His claim to have slashed a bill demanded by the EU has been exposed as fallacious and he could be about to lose another parliamentary seat to anti-EU UKIP at a by-election next week, all of which is making the rump of his party obsess ever more about Britain’s place in the European Union.

Miliband will deliver a speech on Labour’s economic plans today, putting the focus on reforms rather than spending. He will pledge to dismantle what he calls the “zero-zero economy” where people at the bottom work on insecure zero-hours contracts and those at the very top pay zero tax.

The Scottish National Party’s annual conference is about to begin. The party faces the unusual position of having seen its support soar since it lost the independence referendum in September. So strong is its resurgence that it threatens to take any number of UK parliamentary seats from Labour at May’s general election, imperilling its chances of taking power.

The SNP could even hold the balance of power at Westminster next year. Alex Salmond, who resigned as leader after the referendum defeat, suggested yesterday the SNP could support a Labour government in Westminster but could not join a coalition dominated by the Conservatives.

British house price growth slowed sharply in the three months to October to its weakest since May 2013, according to the closely-watched RICS survey released overnight. Data yesterday showed average earnings crept above the rate of inflation for the first time in years. If people start to feel better off, that could shift the electoral calculus but the trend will have to accelerate and persist for that to happen.

Italy will hold a bond auction worth up to six billion euros. After a wobble last month, investors continue to snap up peripheral euro zone debt because of the paltry returns on other government bonds.

Kiev said it was redeploying troops in the east fearing that separatists will launch a new military offensive. Despite Russia’s denials that it has sent troops to reinforce the rebels, NATO says Russia has done just that.

European Union foreign ministers meet on Monday. The EU’s new foreign affairs chief said they would discuss new measures against Russia but German Chancellor Angela Merkel has ruled out further sanctions for now. Russian Prime Minister Dmitry Medvedev is out saying sanctions must be abandoned if relations with the West are to normalize.

Ukraine’s central bank raised its main interest rate by 150 basis points to 14 percent on Wednesday to combat inflation and a plunging currency. Russia’s rouble weakened against both the dollar and the euro early on Thursday.

Iraqi government forces said they have made significant advances in an effort to break an Islamic State siege of the country’s biggest refinery just outside the city of Baiji. They have also captured 60 percent of the centre of the city which IS forces snatched in a rapid summer offensive across northern Iraq. The U.S. military said it had conducted 16 air strikes in Syria, most of them around Kobani near the Turkish border, and seven in the oil-producing northern region of Iraq since Monday.

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