Last week's autumn statement by the Chancellor of the Exchequer, Nigel Lawson, with its surprise announcement of a 7.5 billion ($10.7 billion) rise in government spending in the coming year, is seen as a clear sign of a general election being called within the next year, and probably by June.
Many economic analysts and opposition politicians call the statement on government spending a major policy reversal for the Conservative administration whose leader, Margaret Thatcher, has repeatedly emphasized that she is not one for U-turns in her strict monetarist policies.The rise in spending is being accounted for by extra allocations in 1987-88 in many of the areas of prime concern to voters: social security, health, education, roads and housing.
It will be partially compensated for by lower allocations for defense and industry.
The government also expects its proceeds from the privatization of state- owned industries to total 5 billion in each of the next three years, against the 4.75 billion a year previously forecast.
The sale of British Gas later this year is expected to be the biggest state industry sold, while British Airways will come to the market early next year.
But the net balance after these factors are taken into consideration will be a 4.75 billion overshoot on public spending next year as the government's spending target is raised from 143.9 billion to 148.5 billion.
Over the next two years, however, additional outlays will raise public spending by 10.2 billion, Mr. Lawson had said.
He added afterward that the rise in public spending is not a gamble, but ''a careful judgment based on what we believe can be afforded, shaped by our priorities and within the overall constraint of public expenditure continuing to fall as a share of national output."
He apparently sees no inconsistency between these revised plans and a assurances given during the Conservative party conference in October that the government would resist a pre-electoral spending spree.
With an expected upturn in the British economy next year - with consumer spending increasing by 4 percent and gross domestic product rising to 3 percent from 2.5 percent this year - Mr. Lawson believes he can accomplish his extra spending without having to resort to increased public borrowing.
The public sector borrowing requirement should remain at 1.75 percent of economic output next year, equivalent to the 7 billion PSBR predicted for the current financial year.
Most importantly for the Conservatives' electoral chances, Mr. Lawson believes he can accommodate this rise in spending while still managing another vote getter - a reduction in income tax.
Although he afterward refused to be drawn on the implications of the measures for tax cuts, the general expectation is that he is waiting to spring the good news nearer to the next election in his spring budget.
As stock brokers Kleinwort Grieveson point out in a comment on the autumn statement, the buoyant pace of economic activity means that non-oil tax
revenues will probably be 3 billion higher in the next fiscal year than estimated at the time of the last budget.
Additionally, if oil prices hold at $18 a barrel rather than the previously assumed $15, government oil revenues could similarly be boosted by about 1 billion.
Kleinwort Grieveson's analysts believe that this extra revenue, along with lower debt charges, will more than compensate for the overrun in public expenditure and leave at least 2.25 billion available for tax cuts.
"It is clear that the Chancellor is engineering a classic pre-election boom," the analysts say.
This too has been the reaction of opposition politicians.
The Labour Party leader, Neil Kinnock, said the chancellor's statement showed Mrs. Thatcher's "monetarist miracle" was in a shambles. The little extra spending it provided was merely an effort of the Conservatives to save their electoral skins and showed that Mr. Lawson' s "whole strategy was to bankroll the Tories for the election," he maintained.
The economic spokesman for the Social Democratic Party, Ian Wrigglesworth, accused Mr. Lawson of engineering a short-term pre-election boom for the sake of short-term political gain.
Yet Mr. Lawson's measures were, not surprisingly, broadly welcomed by Conservative members of Parliament.
The popularity of the Conservative party has run neck and neck with Labour and the SDP, although the two most recent opinion polls have shown the Conservatives with a slight lead.
The aim of Mr. Lawson's autumn statement is to convince the British electorate that it has a caring government, one that shoulders the social responsibilities without putting all the burdens on those with incomes to tax.
This aim will be better achieved if the expected strength in economic activities filters through and helps reduce the country's record high unemployment.