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Key political risks to watch in Britain

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On the diplomatic front, relations with Iran have plunged into crisis as the result of an assault on the British embassy in Tehran after Britain raised pressure on the Iranians over their disputed nuclear programme.

Britain economic fate in the short term is dependent on measures to rescue the crisis-hit eurozone, its largest trading partner even though Britain is not part of the single currency.

The eurozone crisis has implications for the coalition in which the smaller Liberal Democrats are the junior partner.

Conservative Prime Minister David Cameron faces increasing pressure from his restive right-wing who sees the crisis as a chance for Britain to claw back more powers from the European Union and are pushing for a referendum on EU membership.

Cameron is also facing a growing wave of street protests against the economic policies of a coalition which took power in May 2010 and made driving down debt and deficit its priority.

Unions angry over pension reform staged demonstrations across towns and cities on Nov. 30 and are threatening more strikes next year.

Anti-capitalist demonstrators have set up camp at St Paul's Cathedral, close to the heart of London's financial zone, and their protests have struck a chord with Britons who feel the gap between rich and poor is getting too wide.

Another potential problem for Cameron is his links to figures involved in a phone-hacking scandal at a tabloid newspaper owned by Rupert Murdoch's News Corp.

The opposition Labour Party has established a seven-point lead over the Conservatives, the latest Reuters/Ipsos MORI poll showed last month.

However, centre-left Labour, in power for 13 years until 2010, is regrouping under new leader Ed Miliband and is not in a position to try to topple the coalition.

The Lib Dems' backing has crumbled since the election, and poor poll showings are helping to ensure they remain loyal to the coalition. An election is not due until 2015 and provoking an early vote would be political suicide for them.

Copyright Reuters, 2011