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There are few certainties in this changed political reality - except that the FSA stays put

David Cameron is a British politician, Leader ...

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It was former Prime Minister Harold Wilson who first said that a week was a long time in politics. He was stating the obvious but has there ever been a week in British politics more packed with drama, the unexpected being trumped the next moment by the unimaginable? Not in my lifetime.

We have our first peacetime coalition government since the National Government of the early 1930s and it is going to take alot of getting used to. The rules of politics have changed and will continue to change. Asked on Radio 4 this morning when the next election will be the new Foreign Secretary William Hague said without hesitation that it will be on the first Thursday in May in 2015. Clearly, the presenter hadn't digested the implications of the commitment to fixed term Parliaments that Mr Hague had just negotiated with the Liberal Democrats. That is one of dozens of changes to the way politics is run that we will all have to get used to.

The biggest change, however, is the sense of co-operation and consensus that David Cameron and Nick Clegg have brought to the huge challenge of forming a government just days after a hard fought election campaign. Remember all that hysterical nonsense a couple of weeks ago about hung Parliaments and how they couldn't work? It all looks very silly now that an agreement has been reached on making government work in a hung Parliament.

What we now have for the first time in two generations is a government that actually represents the majority of people who voted in a General Election. The combined Conservative and Liberal Democrat share of the vote was almost 60%. This mandate is going to be severely tested as the assault on the unsustainable deficit left behind by Labour starts in earnest but it would have been impossible for a minority government backed by a little over a third of the electorate to have tackled this without facing massive opposition in the country that would have destabilised it very quickly. I know there are people in the Conservative Party who say Cameron should have formed that minority government and gone for a second election later this year but what sort of result would that have produced? The combined Labour and Conservative share of the vote is in a long term decline and has just reached its lowest ebb since 1918. Who is to say that trend would not have continued into another election?

We have been a multi-party democracy ever since the Liberal revival of 1974 produced the last hung Parliament but this is the first time our distorting electoral system has truly reflected that. The frantic comings and goings of the last week showed that Cameron and Clegg understand the implications of multi-party politics. The way Labour walked away from the discussions about forming a Rainbow Alliance shows that they do not.

Predictions? The coalition has started well and it looks as if it has the will and desire to survive the tough political battles of the next few years. Regardless of our own political views, we have to wish it well and hope that it makes the right decisions to steer us out of the economic mess it has inherited. The willingness of both parties to compromise already looks as if it is on the way to producing a policy mix that is in some areas, such as taxation, an improvement on what either party offered by themselves.

On financial regulation too we have some real commonsense emerging. Gone is the Tories' pledge to abolish the Financial Services Authority (misguidedly supported by alot of independent financial advisers and insurance brokers), to be replaced with a limited transfer of market stability powers to the Bank of England. The Liberal Democrats desire for a crude separation of retail and investment banking has been put on hold too as it has been referred to an inquiry. By the time this reports the new solvency and capital requirements will be starting to bite and may well bring about a more managed separation of different types of banks and banking anyway.

Whatever else comes out of this new form of government, we have witnessed events over the last week that will have their own books and chapters in the history books of the future. 

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