Will there be an early general election?

With the installation of yet another Prime Minister without an electoral mandate, calls have been growing for an early general election. What are the odds of that happening?

Time almost up for 2022

A 2022 general election is rated as a 3% chance but, if anything, that probably overstates the chances of it happening. No matter how changes of leader the Conservatives have in office, they are under no constitutional obligation to call an election any earlier than January 2025 which is the last possible date allowed. Given the latest prediction by Electoral Calculus forecasts that the Tories would be down to just 48 seats (!) based on current polls, there is a vanishingly small chance that enough Tory MPs would vote for one right now. Turkeys don't vote for Christmas.

Smarkets odds at 25 October

2023 might be a runner....

A 2023 date is certainly more plausible and currently trading at 23%. There are essentially two types of scenario that could do it:

1. Things are going so well for the Tories that they think they can win.
2. Things are going so badly that the government loses a no-confidence vote or decides a general election is somehow the only way out of a particularly difficult political mess.

Incumbent governments take the early election gamble because the polling suggests they are going to win. Thatcher in 1983 and 1987, Blair in 2001 and 2005 and May in 2017 all went earlier than needed and stayed in power (although in Theresa May's case it was with a minority government as a result). Some sort of polling recovery seems more or less a given for the Sunak government which is virtually guaranteed to be a more orderly administration that the one it replaces. I would not be at all surprised to see 25pt Labour leads shrinking to somewhere nearer 15pts quite quickly.  Getting back ahead of Labour however looks a long-shot anytime soon. It could happen, but would probably need some fairly dramatic upturn in the economy - maybe generated by an earlier than expected end to the war in Ukraine. Overall, I'd guesstimate a 10% chance for this.

Absent a truly historic polling turnaround, the other trigger could be a political crisis for which the only solution is an election. The Sunak government is likely to face some very difficult policy decisions. Perhaps some particularly critical piece of legislation or spending decision runs into parliamentary trouble. If they are at least within touching distance of Labour, Sunak might decide a "back me or sack me" general election is the only way forward even if a victory seems odds-against. Plausible in theory, but there aren't many historical examples of anything like this actually happening. Even adding in the possibility of the government losing a no-confidence vote, I'm inclined to rate this at no more than around a 5% chance.

So, at current market prices, I'd much rather be a layer rather than a backer of an early election, although some smart people see it very differently!