With only a few days left until the general election, everything appears up for grabs as this week’s final leaders’ debate turns the spotlight on the economy.
A hung Parliament leading to either a LibDem/Labour or LibDem/Conser-vative coalition is a very strong possi-bility. This means it is hard to predict the future shape of the industry or the tactics that will be used to encourage economic recovery.
Much depends on the influence that the LibDems hold in the next administration and who they decide to jump into bed with in the event of a hung Parliament.
Despite the raft of hints and predictions in the national press, the LibDems will keep their cards very close to their chest until voting has finished.
The LibDems agree with Labour and disagree with the Tories over the speed and severity of the cuts that need to be made to lower the deficit.
They also agree with Labour that the FSA should not be scrapped whereas the Tories are clear that it should be replaced by a Consumer Protection Agency, with prudential regulation passed to the Bank of England.
The LibDems have backed Bank of England governor Mervyn King’s call for a strict separation of investment banking and retail banking while the Tories suggest that the riskier end of the investment banking spectrum could be ringfenced. Labour shares the FSA scepticism that such a separation is practical. Higher-rate pension tax relief may be in the firing line of a Lab/LibDem coalition although reform cannot be ruled out of a Con/LibDem Government.
A hung Parliament would lead to a huge amount of horse trading and it is far from clear what economic polices would emerge.