A previous post argued that more favourable voter perceptions of the economy would result in a further narrowing of the Conservative poll lead over Labour near term, increasing fears of a hung parliament. This shift, however, would be reversed from early 2010, reflecting sharply-rising inflation. Economic factors, therefore, argued for Labour calling an early election rather than delaying until the last moment.

Recent polls support the first part of this forecast: the last five results reported on the excellent ukpollingreport.co.uk show a Tory lead of between 7 and 9 percentage points – below the 10 point gap widely regarded as necessary to guarantee a majority. Economic perceptions seem to be driving this move: the EU Commission's consumer confidence measure vaulted higher in January to its highest level since November 2007.

The earlier forecast was based on statistical analysis of Guardian / ICM polling data since the early 1980s. The results indicate that the position of the governing party relative to the main opposition depends positively on average earnings and house price growth and negatively on retail price inflation, unemployment and changes in interest rates – the chart shows fitted values of a model based on these factors.

According to this analysis, Labour is benefiting from rising house prices and the lagged impact of last year's low inflation while the labour market has become less negative, with unemployment and earnings growth stabilising. The model predicts a Tory lead of only 2 percentage points based on economic factors – the 7 to 9 point gap may reflect other influences that are working to Labour's disadvantage.

Labour strategists are counting on economic developments continuing to boost the party's support but the model suggests that the positive impact is peaking. On plausible assumptions about the inputs – including a rise in retail price inflation to 4-5% this spring – the poll gap is forecast to widen to 9 percentage points by May. If non-economic influences result in Labour continuing to underperform the model's predictions, this would be consistent with an outright Tory victory.