The coalition will hold

By Wolfango Piccoli

British voters are set to reject electoral reform in the May 5 referendum and deal a blow to the incumbent Conservatives and Liberal Democrat Party (LDP) in local and regional elections held concurrently. The fight over the electoral reform will damage the relationship between the coalition partners, but the government will survive and early elections are unlikely.

The referendum lies at the heart of the power-sharing deal struck between the Conservatives and the LDP. The LDP demanded the vote as a key condition for joining the coalition after the Tories, who want to retain the existing first-past-the-post system, failed to win a clear victory in last year's general election. The Labour party is split on the issue, but its leader Ed Miliband supports a system in which voters rank candidates in order of preference.

Local government elections will also be held in Scotland, Wales, and much of England, providing the first comprehensive indication of how the main parties have fared since last year's general election. Labour is expected to make the most gains, with some pollsters suggesting the party could gain more than 1,000 council seats. Prime Minister David Cameron's Conservative Party is expected to suffer big losses, possibly as many as 900 seats. The LDP meanwhile could lose control of around half of the 22 councils it is defending, possibly including prized possessions such as Bristol, Hull, Newcastle, and even Sheffield, where party leader Nick Clegg's seat is located.

In such a scenario, Nick Clegg will have to contend with disgruntled party members (mainly from the left of the party), who may step up their criticism of the coalition and he may even have to fight a leadership challenge. But there is no viable replacement and he will continue as party leader. To recover, Clegg is likely to champion (with the prime minister's consent) an accelerated reform for the House of Lords, push ahead with his social mobility agenda for higher education, and fight for changes to the National Health Service.

The Liberal Democrats will not, however, leave the coalition. The party would cede all credibility if it were to walk away. Also, the LDP is down in the polls, which provides no incentive to provoke an early election. Neither will the Tories be tempted to end the relationship. They are unlikely to win a parliamentary majority in a snap election. But it will not be business as usual after 5 May. Clegg's party will strike a more independent tone, reminding the Conservative Party that it owes the LDP for its ability to govern.

Wolfango Piccoli is a director in Eurasia Group's Europe practice.

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