Has the PM turned the corner after the Terror Bill defeat?

The collective view of people prepared to risk their money predicting political outcomes is that Tony Blair has a 22.7% chance of completing the majority of a normal third term as Prime Minister.

Using implied probabilities based on historical and current betting prices we are making a regular feature of how punters are rating the key political issues. Our first – the betting market assessment of Labour winning most seats at the next General Election – was on Sunday. Today we focus on the political gamblers’ view of how long Tony Blair will stay at Number 10.

There are many different betting possibilities and the one we have chosen is the market on him still being at Number 10 after January 1st 2008. Although betting on these long-term markets is relatively light it does show the levels at which punters are tempted to bet.

As can be seen there has been a sharp movement since the summer and now the market assessment is that he has a less than a one in four chance of still being there at the start of 2008. In August the rating was in the high 30s.

The big driver in recent weeks has been the defeat on the vote on the Terror Bill although there is just a sign that a recovery is on the way. We think that there is good value at the current price level on Blair staying and in coming weeks a lot depends on how he handles his fifth Leader of the Opposition. We think that he will do quite well and the third term index will rise.

We also plan to run “Gordon Brown” and “Hilary Clinton” indexes.

Mike Smithson