economy and from its move to initiate a comprehensive review of the tax system in its bid to be re-elected, the Economist Intelligence Unit (EIU) states in its latest report about the Island.

The EIU 4th Quarter 1997 Country Report speculates that the UBP may call an election soon after the February budget speech. The current term expires in October this year.

The EIU is a division of the same company which produces The Economist magazine.

"The Finance Minister, Grant Gibbons, is likely to produce an election budget focused upon garnering support among middle- and low-wage earners while maintaining the government's traditionally good links with business interests,'' the EIU said.

"The party will be favoured in the elections by the current strength of the economy, as well as the perception that it has taken effective action to rejuvenate the flagging tourism and retail sectors. It will remain a closely fought election, however, with the UBP currently holding a majority of just four seats.'' The EIU forecasts the economy will remain strong through the next two years with international business and the construction sectors underpinning growth.

"Continued growth in the international business and coinstruction sectors will ensure growth of an annual average of three to 3.5 percent over the forecast period, although the tourism sector will continue to struggle in the short term.'' On the political front, Premier Pamela Gordon is described as a leader who has managed to calm internal tensions in the UBP.

"Understated but effective control by the Premier, Pamela Gordon, has managed to soothe internal division in the ruling UBP, and there have been no open confrontations comparable with those which occurred earlier this year (1997) when five party members protested against the granting of a fast-food restaurant licence to a former premier, John Swan,'' the EIU states.

The report notes the UBP has taken on board one of the opposition Progressive Labour Party's main campaign plans by initiating a review of Bermuda's tax system.

The PLP has been forced to shift its campaigning to emphaisis on another of its themes -- increased "Bermudianisation'' of the workforce.