UK coalition hits skids but divorce unlikely

Britain's Prime Minister David Cameron looks out as he stands on the Giant's Causeway during his visit to Northern Ireland August 1, 2012.

LONDON (Reuters) - Prime Minister David Cameron's two-year marriage with his junior coalition partners has hit the skids, but fear of electoral drubbing will probably keep them from divorce - for now.

No matter how angry the Conservative and Liberal Democrat coalition parties are after their biggest ever row, neither can yet afford to sink the coalition in the worst economic crisis since the Great Depression.

Liberal Democrat leader Nick Clegg sounded like a betrayed spouse when he took to the airwaves to denounce Cameron's Conservatives for abandoning plans for elections to the House of Lords, the unelected upper house of parliament.

"The Conservative Party is not honoring the commitment to Lords reform, and as a result, part of our contract has been broken," Clegg told reporters after announcing the demise of his plans for reform of the Lords.

The reform has been a goal for generations for the Liberal Democrats, who say the upper house, made up of political appointees, hereditary lords and bishops, is undemocratic and maintains the power of bigger parties.

Clegg said the Liberal Democrats would oppose the government's plan to redraw constituency boundaries for the more powerful House of Commons, a pet project for Conservatives who hope it would win them as many as 20 extra seats.

But the tussle over political reform has illustrated the fissures within the coalition which some analysts said could disintegrate well before the 2015 national election.

Patrick Dunleavy, professor of politics at the London School of Economics, said Cameron could opt to sink the coalition and take his chances in an election as early as next year if the economic crisis showed signs of deepening.

"David Cameron would be extremely foolish or outright bonkers to try to stumble on until 2015," said Dunleavy.

"The big problem in these kind of coalitions is that they tend to unzip from the end. The temptation is to bail before the last. But if I know you are going to bail before the last, what should I do? I should bail in the period before the next to last, and so on. That logic works incredibly powerfully."

If and when the coalition unravels will depend on the economy and opinion polls: so far, the economy is showing no signs of growth and voters are unhappy.

"ABSOLUTELY DETERMINED"

An August poll showed 59 percent of voters disapprove of the government's record while just 25 percent approved.

The poll, carried out by YouGov, showed 44 percent of people would vote for the main opposition Labour Party, while 34 percent would vote Conservative and 10 percent Liberal Democrat.

Under Britain's first-past-the-post system, such a result would all but wipe out the Liberal Democrats and end Cameron's term in office, which began when the coalition took power after an inconclusive election in May 2010.

Both parties insist they will press on, determined to carry out their plans to reduce borrowing and kickstart growth.

"The thing that brought the coalition together and that remains the priority was an economic rescue mission. The economy has been the priority, not political reform," a source in Cameron's Downing Street office told Reuters.

"Of course you are going to get bumps in the road but the economy was always the overriding priority and that remains as strong today as it was in May 2010 - and that's why we're absolutely determined the coalition will carry on until 2015."

But pressure on both leaders to exit the coalition will increase further if their bet that growth will return to ease the burden of spending cuts sours further.

So far, Britain has slipped back into recession and the lack of growth will worsen deficit forecasts. The Bank of England said on Wednesday Britain's economy will hardly grow this year and cut its medium-term growth forecast.

Clegg said his relationship with Cameron was "fine" but ducked a reporter's question on whether he could really trust his coalition partners, while Cameron said he had a good relationship with Clegg but could not hide disagreements.

"There is a fundamental disagreement here," Cameron told a local radio station.

"This disagreement is not going to get in the way of getting on with what really matters: getting people back to work, getting our economy moving, getting investment in Britain."

The electoral reform dispute could return soon. Cameron said he intends to press ahead with the constituency boundary redrawing plans, which have been approved by the cabinet, including the Liberal Democrats.

If a vote goes ahead on the boundary review, probably in 2013, and Liberal Democrats vote against it, then the coalition would be thrown into crisis. Conservatives will wonder why they need to hang onto the Liberal Democrats at all.

Meanwhile, Cameron will be under pressure from Conservatives to improve their own electoral prospects. He will have to keep an eye on rivals like the popular London Mayor Boris Johnson, a Conservative who has won two elections in a Labour-leaning city and could be waiting in the wings to lead the party if he fails.

"I think Prime Minister David Cameron has 18 months to improve things," said Tim Montgomerie of Conservative Home, a website that monitors the party.

(Reporting by Guy Faulconbridge; Editing by Peter Graff)