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Trudeau Poised for Second Term in Tight Canadian Election

Trudeau Poised for Weakened Mandate as Canada Voting Day Arrives

(Bloomberg) -- Canadian Prime Minister Justin Trudeau appears set to retain power in a close election Monday but lose his parliamentary majority, forcing him to rely on a left-leaning party to survive a second term.

A Trudeau victory would avert an historic collapse for the Liberal leader who was elected four years ago on a wave of optimism and change, only to hobble himself with a series of scandals, including revelations that he wore blackface when he was younger. Only four times in the nation’s history has a prime minister been ousted after one term.

Trudeau’s governing Liberals, benefiting from a late campaign bounce, are projected to win 137 of the 338 districts in the House of Commons, compared with 124 for the opposition Conservatives, according to a poll tracker compiled by the Canadian Broadcasting Corp. Another aggregator -- 338Canada.com -- has the Liberals winning 142 seats, short of the 170 needed for a majority.

Trudeau Poised for Second Term in Tight Canadian Election

“It looks like things are breaking for the Liberals,” said pollster Frank Graves, president of Ekos Research Associates. “I don’t see how the Conservatives can win right now.”

Trudeau’s weakened position may force a leftward shift in his agenda -- already the most left-leaning in at least a generation. Without a majority, Trudeau, 47, may be able to govern with the support of the New Democratic Party, the country’s version of social democrats. The party is anti-pipeline, and wants more aggressive moves to combat climate change, higher taxes for companies and the wealthy, and the creation of new universal social programs.

A Liberal government propped up by the NDP would be a blow to Canada’s energy sector, already saddled with reduced oil prices due to pipeline bottlenecks. The prospect of that loose alliance may also send the Canadian dollar lower, strategists have said.

The political uncertainty had little impact on markets Monday, with the loonie rising to a three-month high of C$1.3084 to the U.S. dollar, while equities and government bond yields rose.

The electoral outcome remains far from certain. The Liberals are still close in the popular vote with the Conservatives, led by Andrew Scheer. The last polls had the two leading parties deadlocked at 32%. The Liberals won almost 40% of the vote in 2015, when they took 184 seats.

Trudeau Poised for Second Term in Tight Canadian Election

A tie or even a small deficit in the popular vote favors the Liberals, who are projected to win the most districts because their support is more widespread across regions. The Conservatives have large leads in western Canada, where there are fewer districts to be won.

The CBC’s poll tracker assigns a 12% chance the Liberals will eke out a majority, and 48% odds on a Trudeau minority. The Conservatives have a 37% probability of winning the plurality of seats, according to the CBC. Even if the Conservatives win the most seats, Trudeau, as the sitting prime minister, would still have the first crack at forming a government, though that would be politically challenging if he loses by a wide margin.

Wild Cards

There are many wild cards, including voter turnout, the strength of the separatist Bloc Quebecois, and whether Toronto’s vote-rich suburbs will break Trudeau’s way. The biggest question mark may lie on the West Coast. British Columbia, Canada’s third-most-populous province, looks like a dead heat among the Liberals, Conservatives and the NDP led by Jagmeet Singh.

Singh, 40, the first visible minority to lead a party into a federal election, has plateaued after surging on the strength of his leaders’ debate performances. He looks poised to take a bruising in Quebec, which had once been his party’s power base. The NDP is projected to win about 35 seats, enough to just barely prop up the Liberals with a majority if the projections for both parties are borne out.

Trudeau Poised for Second Term in Tight Canadian Election

Scheer sought to ride a wave of Trudeau fatigue while offering a small-government, low-tax vision that lifted his predecessor, Stephen Harper, to govern in Canada for almost a decade.

Scheer, 40, cast himself as an every-man, in distinct contrast to Trudeau’s penchant for jet-setting pageantry. But his pitch hasn’t gained much traction. His approval ratings --hovering in the low ‘30s -- are on par with Trudeau’s own sluggish numbers. Nor are the Conservatives polling much better than they did ahead of their 2015 loss.

Over the weekend, pollsters showed Trudeau building an advantage over Scheer in vote-rich Ontario, where differences in fiscal policy seem to have been a determining factor.

Deficit Spending

While Scheer is pledging to balance the federal budget in five years, Trudeau has doubled down on deficit spending and has campaigned largely against the province’s premier, Doug Ford, a populist conservative who swept to power last year but who has grown deeply unpopular amid spending cuts. Scheer has spent much of the time distancing himself from Ford, who has remained largely out of the public eye throughout Canada’s campaign.

Minority governments are not uncommon in Canada -- it’s happened in three of the previous five elections. If Trudeau falls short of 170 seats, precedent suggests he’d likely pass laws on a case-by-case basis with support from one or two other parties, rather than establish a formal coalition.

That outcome wouldn’t be unprecedented for Trudeau’s own family. His father Pierre won a minority in his second election as leader in 1972, before going on to govern for a decade more.

Preliminary results will start trickling in once the first polls close in Newfoundland on the Atlantic coast at 7 p.m. Eastern time. The polls in Ontario and Quebec close at 9:30 p.m., followed by British Columbia at 10 p.m. Voter turnout in the last election was 68%, the highest in 22 years.

To contact the reporter on this story: Josh Wingrove in Washington at jwingrove4@bloomberg.net

To contact the editors responsible for this story: Theophilos Argitis at targitis@bloomberg.net, David Scanlan, Chris Fournier

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