March 30, 2015 / 8:04 AM / in 3 years

UK's Cameron meets Queen, starts knife-edge election campaign

LONDON (Reuters) - Campaigning in Britain’s closest election in decades began on Monday after Prime Minister David Cameron met Queen Elizabeth to tell her parliament had been dissolved, teeing up a fraught battle to govern a $2.8 trillion economy.

Britain's Prime Minister David Cameron speaks as he returns to Number 10 Downing Street, after meeting with Queen Elizabeth at Buckingham Palace in central London March 30, 2015. REUTERS/Toby Melville

Cameron made the journey to Buckingham Palace to see the monarch in an armored limousine as TV crews buzzed overhead, a formality marking the end of five years of coalition government between his Conservatives and the center-left Liberal Democrats.

Britain excels at set-piece constitutional events. The consequences of the May 7 election - which polls predict nobody will win with an outright majority - look more disorderly.

Membership of the EU could hang on the outcome as does the future of the increasingly frayed relationship between the United Kingdom and its most restive part: Scotland.

Standing in front of his Downing Street office after meeting the Queen, Cameron told voters he had presided over an economic recovery that needed cementing.

“In 38 days you face a stark choice,” he said. “The next prime minister walking through that door will be me or (Labour leader) Ed Miliband. You can choose an economy that grows ... or you can choose the economic chaos of Ed Miliband.”

Miliband, speaking at an event meant to dispel criticism his party is anti-business, said Labour offered a fairer economic plan and warned Cameron’s plan to hold an EU membership referendum posed a “clear and present” danger.

“It is a recipe for two years of uncertainty in which inward investment will drain away,” he said.

In a sign of how fragmented Britain’s political landscape has become, Cameron and Miliband will join the leaders of five other parties on Thursday for a seven-way TV debate.

Both the Conservatives and Labour say they want to better manage immigration and pump more money into the state health service. The main difference between them is on a still-yawning budget deficit. The Conservatives promise to cut it faster, Labour says it would do so more slowly.

EU EXIT?

Latest opinion polls underscored the electoral uncertainty. One gave Labour a four point lead, the other put the Conservatives ahead by the same margin.

Most polls put the two neck-and-neck. None gives either party enough support to govern alone. That means the winner may need to rule in minority, relying on others on an issue-by-issue basis, or enter a formal coalition with another party.

The contest is freighted with contradictions. Even though the economy has rebounded from its deepest downturn since World War Two to become one of the fastest-growing in the industrialized world, many Britons haven’t felt the benefit as wages have stagnated.

If Cameron is re-elected, he has promised to deliver an EU membership referendum by the end of 2017, raising the specter of Britain leaving the world’s largest trading bloc, something the United States and much of UK business has made clear it doesn’t want.

If Britain voted to leave the EU, Scottish nationalists have signaled they would push for another independence referendum, even though they lost one just last year. Labour opposes an EU referendum.

Buffeted by immigration from eastern Europe after 10 mostly former communist states joined the EU, many voters blame the bloc at a time of austerity for pressure on wages and school and hospital places.

Cameron promised to reduce annual net migration to the “tens of thousands”. Instead, it is running at around 300,000.

The issue has helped fuel the rise of the anti-EU UK Independence Party (UKIP), a party sometimes compared to the U.S. Tea Party movement. It wants sharply lower immigration and a swift British exit from the EU.

Britain’s first-past-the-post electoral system means UKIP is unlikely to win more than half a dozen of 650 parliamentary seats while finishing second in large numbers of them.

But it has the power to take large numbers of Conservative votes, and some from Labour too, making it harder for Cameron to win. A likely collapse of the Liberal Democrat vote is also up for grabs.

SCOTLAND

The bigger danger for Labour lies in Scotland.

Nationalists lost an independence referendum last year but have bounced back with unexpected vigour. Polls show they could enjoy an almost clean sweep of the 59 Scottish Westminster parliamentary seats, dealing a hammer blow to Labour which currently has 41 of them.

The nationalists, who could emerge as Britain’s third biggest party, say they would only do a post-election deal with Labour. Miliband has ruled out entering a coalition with them, but has left the door open to an informal arrangement.

The nationalists say their end goal remains independence.

Neither the Conservatives or Labour will yet entertain coalition deals, insisting they can win an outright majority.

Privately, it is a different story.

“It’s tough to call, but I think the Conservatives will just about emerge as the largest party,” a senior Labour lawmaker, speaking on condition of anonymity, told Reuters.

“But they won’t win an outright majority and their government might not last, meaning that before long we might be faced with a second election.”

Editing by Guy Faulconbridge/Mike Peacock

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