Published in Business Spectator (Melbourne), 23 April 2015

The UK elections are only two weeks away and typically, at this stage of the campaign, one should have at least a rough idea what is going to happen. Not so this time. One of the few certainties about the result and its implications is that nothing is certain.

For months, Labour and the Conservatives have been neck and neck in opinion polls, both stuck somewhere between 30 to 34 per cent. On such numbers, neither party could hope for an absolute parliamentary majority, not even under Britain’s first-past-the-post system. It would leave David Cameron’s Tories and Ed Miliband’s Labour on around 270 seats each (where 326 seats are required for a majority). That is well short of a clear mandate for either party to govern on its own.

All eyes are therefore on the smaller parties — and there are quite a few of them. The Liberal Democrats, who are currently in a coalition with the Conservatives, would be lucky to reach double digits this time (five years ago, they gained 23 per cent). The UK Independence Party could well score in the mid to lower teens — and still fail to win any seats. The same is true for the Greens on around 5 per cent.

The one party that could tip the scales, however, is the Scottish National Party. It is currently projected to win Scotland by a landslide, giving it 55 of Scotland’s 59 seats.

As it appears at the moment, three options are thinkable after 8 May. Unfortunately, none of them looks a particularly appealing choice. The UK could end up with a hung parliament of no viable majorities. It could see a Labour government propped up by the votes of the Scottish nationalists. Or it could potentially see a continuation of the current Conservative coalition with the Liberal Democrats, provided it also secures support from some other fringe parties.

None of these potential governments would bring any political stability. Both a Labour and a Conservative-led government could result in a substantial challenge to Britain’s constitutional status. And finally, neither of these government constellations would promise to tackle the country’s real long-term challenges.

The UK’s long-term challenges are quite easily expressed in a few figures. The UK is borrowing just over £90 billion this year, equivalent to just under 6 per cent of GDP. To put it into context, even Greece’s budget deficit has now fallen to just 3.5 per cent. Though Britain’s deficit has come down from even worse levels six years ago when it stood at 11 per cent, it is still way too high for an economy now growing at 2.8 percent.

One might well ask if such levels of growth are not enough to turn the budget to surplus, what the budget would look like if there was an adverse shock.

Besides, the UK’s total public debt level now stands at close to £1.5 trillion. At more than 90 per cent of GDP, it is almost double the size it used to be in the 20 years prior to the global financial crisis. It is also closer now to France’s debt load than to Germany’s.

The number one priority for any future British government would therefore have to be debt and deficit reduction, which we have come to know by the name of austerity. Yet there is not much talk about austerity in this election campaign. The contrary is true.

Labour has promised increased spending in areas such as health and a reduction in university fees. However, the party still claims that every policy in its manifesto is paid for, and that none would require additional borrowing. The Tories meanwhile have promised even more feel-good policies, which would cost Britain dearly. Free childcare for working parents, for example, and huge discounts for buying your council home. Again, the Tories pledge that this would not run counter to the goal of budget consolidation.

Maybe these manifesto pledges are explained by the uncertain majorities in the next parliament. If no party can expect to gain an absolute majority, it means that there will be plenty of excuses for unkept promises.

Beyond the fiscal challenges, the constitutional problems following the May 7 election are profound. If Labour wins, it will be dependent on the Scottish nationalists. Last year, they lost a referendum on Scottish independence but they will use their influence on Labour to demand greater devolution of power to Edinburgh — and pave the way for a new referendum on Scotland.

A Labour government propped up by the SNP would therefore not only shift politics far to the left — it would also put a question mark over the future of the United Kingdom.

A Tory victory would be no less problematic. Prime Minister David Cameron has promised to hold an “in or out” referendum on Britain’s EU membership if he is returned to office. Cameron wants to renegotiate the terms of Britain’s membership and the set-up of the EU and then put the result to the British people.

It is predictable what is going to happen in such an exercise. The EU would not be able to give Britain any concessions; and Cameron would still celebrate whatever breadcrumbs he gets as a great success. In the end, the eurosceptic British public, edged on by an even more eurosceptic media, might well vote for “Brexit” — Britain’s withdrawal from the EU.

So the two most likely scenarios after the UK elections are either a big push for Scottish independence, which could end up in splitting the UK. Or a situation which might well see the UK leave the EU.

Neither of these two options would be easy for Britain to manage. And neither would address the fiscal sword of Damocles hanging over Britain’s future.

Britain may go to the polls on May 7, but the country’s real and existential problems will not be addressed by the vote.

With a once again buoyant housing market and decent growth figures, the British might think that they have left the economic crisis behind them. In truth, the real British problems still lie ahead. It will be a crisis on multiple fronts: over Britain’s constitutional status, its public finances and its membership of the EU.

And of course, we will have to see if Britain will still be governable after an election that is likely to produce a Parliament more akin to a proportional representation system than a first-past-the-post model.

Few things about this year’s British general elections are predictable. The one exception is that governing Britain will not be any easier after May 7.

Perhaps we should all be more concerned about Britain’s future political paralysis, a Brexit or a breakup of the UK than anything happening around Athens?