This week features two of the most dramatic elections in years, both of which could have far-ranging economic consequences. The first is in Alberta, where the once impregnable provincial Conservatives will find out Tuesday if a disgruntled electorate lets them retain their faltering grip on power.
But it's the British election on Thursday that is capturing the world's attention.
After decades of relatively stable and predictable politics dominated by two parties, Labour and Conservative, the landscape has markedly changed and the direction of fiscal and economic policies has become increasingly uncertain.
Regardless of which main party takes the most seats, neither is expected to gain a majority, forcing them to seek out coalition partners and setting the stage for a weak government with a clouded future.
That, in turn, would leave question marks dangling over such key business concerns as the large budget deficit, taxation, regulatory reforms, the stability of the British pound, the widening current account gap and even the country's future in the European Union. All of it could spell trouble for a still ailing economy, roiling the capital markets, unsettling the currency and triggering caution on spending until the political fog clears.
"The biggest risk coming out of this election is if there is a government that looks too weak to survive for an extended period, be it led by the Conservatives or Labour," says Howard Archer, chief U.K. economy watcher with IHS Economics & Country Risk in London. "This would risk a prolonged period of uncertainty that in particular … constrains investment. Healthy business investment is key to a more balanced economy and to lifting productivity."
Polls show the Conservatives running neck-and-neck with Labour, with the two expected to account for about two-thirds of the total vote, a reflection of the rise of smaller parties and the growing discontent of the voting public.
As recently as 2005, Labour and Tory candidates captured nearly 86 per cent of ballots cast.
The perennial No. 3 Liberal Democrats took just under 10 per cent of that vote and every other party managed less than 5 per cent. The small parties won a smaller share in the 2010 vote.
Conservative leader David Cameron emerged from that election 20 seats short of a majority, leading to the first coalition government in Britain since the depths of the Great Depression. His junior partner, the Liberal Democrats, face a drubbing this year over their support for the Prime Minister's unpopular austerity measures designed to tackle the government's fiscal woes.
Meanwhile, the left-of-centre Scottish National Party and far-right U.K. Independence Party have gained enough traction to further muddy the election waters. Polls show that some Scottish Conservatives are so worried about a sweep in Scotland by Britain's version of the Bloc Québécois that they intend to switch their votes to Labour candidates.
Labour leader Ed Miliband spends campaign time vowing never to form a coalition with the SNP, preferring to try his luck with a minority government. Mr. Cameron makes similar disavowals of UKIP; and Liberal Democrat leader Nick Clegg seems ready to combine with whichever major party will have him.
"It's one of the most difficult elections I've ever seen to try to read," author and CNN host Fareed Zakaria said.
"In Britain, you used to have a pretty simple two-party system [leaving aside the Liberal Democrats, as many voters have], and you could pretty much predict the outcome."
Now, with the various coalition or minority possibilities, "this is becoming more like Israel than Britain."
Mr. Zakaria expects the Tories to claim a second minority victory, leaving them no choice but to cobble together another coalition. And their only possible partner is the Lib Dems. If the latter go down in flames, "there is no natural coalition majority."
Whatever government does emerge will face daunting challenges, signalled by sharply weaker growth in the first quarter.
The economy "looks like a ticking time bomb waiting to explode after the election," Albert Edwards, Société Générale's bearish London-based global strategist, said in a recent research note. "The crux of the problem is simple: The coalition has ended five years in government with grotesquely wide deficits still in place in both public sector finances and external imbalances."
To the extent the British economy has gained any ground, he added, "it is not because the public sector deficit-cutting has 'worked,' as the government claims, but because for the last three years, the government has quietly abandoned all pretense at fiscal cuts, kicking the can into the next Parliament."