The BBC marked the 30th anniversary of the election of former UK Prime Minister Margaret Thatcher by re-running its coverage of the 1979 election on its BBC Parliament television channel on Bank Holiday Monday (The coverage is still available to download for UK viewers over the next week at http://www.bbc.co.uk/programmes/b0074yz8)

Watching the material helped crystallise a few of my long running thoughts on the next general election, which must be held by this time next year.

While the Conservatives may be nearly 20 points ahead in the polls, they still have an electoral mountain to climb. Going into the 1979 general election, the Conservatives held 277 parliamentary seats, and needed to gain just 41 seats to gain a majority of one. In the event they gained 62, but in 2010 the Conservatives must add 128 seats to their tally in order to form a majority administration. The sheer logistical effort of managing a general election targeting this many seats is almost unprecedented, and a landslide of 1997 proportions will be required.

Britain is once again at an economic cross-roads. Just as in 1979, Thatcher found herself in charge of an economy with a very poor record in industrial relations, and an industrial sector in crisis. Furthermore, the winner of the 2010 general election is facing a financial sector plagued with problems. The new administration will either have to tackle head-on the underlying asymmetries and rebuild the competitiveness of the banks and investment industry, or a new economy-wide growth model is going to have to be found. Both options are going to require considerable political courage to make some very tough choices.

Fiscal reform is even more pressing in 2010 than in 1979. Margaret Thatcher built her reputation as a ‘small government’ politician, and by the time she left Downing Street government debt as a percentage of GDP was on its way to halving from the 47.2% she inherited. The next government faces debt ratios which have gone into orbit, with government debt already at 50.9% of GDP. Debt could well punch through 70% over the coming years. Totally overhauling the government’s spending priorities and debt management will be a task to rival pushing through the privatisation process of the 1980s. This will be far from an enviable task. The risk is that should the next government (Conservative or Labour) falter in pushing forward economic reform, the economic and real GDP growth volatility will rise far above the levels seen through the 1980s, 1990s and 2000s, and instead mark a return to 1970s levels. In such a scenario, we would expect the fractious political climate of the 1970s to return as well.