The debate on the “deficit” is misleading UK voters

The state of the UK economy compared to how it was five years ago, and the European Union at the moment, is impressive. Fragile, but nonetheless impressive, and the country's coalition government should be commended for that.

But let's make one thing clear: one of the main reasons this has been achieved is because the "austerity" that the Conservatives were calling for five years ago has not materialised.

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The national debt has increased every year since 2010, is still increasing, and will still be increasing near the end of the next Parliament. For the government to highlight that the economy has improved whilst the deficit has been cut is pulling the wool over the eyes of most voters who are understandably misled by the complicated terminology relating to our level of indebtedness. The rate at which the debt is increasing has slowed, but it's still going up.

The Conservatives had wanted to spend less than the coalition government has ended up shelling out, but thankfully they have not been as fiscally restrained as the bailed out countries like Greece.

Nonetheless, the opposition don't really have much of an argument to make against the economy. Because the economy has improved Labour has had to temper its spending plans.

In fact, the headline fiscal plans of the UK's two main parties are not as different as one might expect. Don't get me wrong, politics in the UK is more polarised that it has been for 20 years, and certain policies show stark ideological differences, but the country's relative economic strength compared with the rest of Europe has prevented a far left uprising in the UK in the way we have seen in Greece and Spain.

If the Conservatives can articulate their message more clearly, then the economy should be helpful for them when it comes to May's general election. At the moment the deficit debate just seems to be confusing voters and gaining neither party much traction in the polls.

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The main issues

Conservative's Hague: English laws for English people
Conservative's Hague: English laws for English people   

Outside of that, the issues of Europe and immigration controls are crucial, more so than it has been since the 1990s. Interestingly it is much more of a cross party issue than it has been in the past, but whilst it will cost both Labour and the Conservatives votes, it will likely only cost the latter actual seats.

Nonetheless, I expect UKIP to win far fewer seats than the polls are suggesting – although UKIP has now won Parliamentary seats, they have only done so via defections, and a large amount of their current support may prove to be in protest and desert them when it comes to May.

The NHS is also a crucial topic like it always is, but frankly it's a little tedious. We all want it to stay. We all want it to get better. We don't really believe any party has the ability to carry that out – and too much politicisation of the issue just makes voters tire of politicians in general.

The wild card which is largely ignored at the moment is constitutional reform. At a time when voters are disillusioned with everyday politics, changing the way our country is governed has the ability to boost turnout significantly, and thereby upset all the current polls or predictions. The Scottish Independence vote last year highlighted how nationalistic issues really capture people's imaginations.

Referring to the "English votes for English laws" issue Hague told CNBC that there would be a "specific pledge to have fairness for the whole of the UK, including England" in the Conservative manifesto. They have kept relatively quiet about this so far, but it's a topic to watch.

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Coalition looking likely

Conservative's Hague: No coalition, thanks!
Conservative's Hague: No coalition, thanks!   

Labour could lose more seats to the SNP than the Conservatives lose to UKIP. Whilst this will hurt their ability to win a majority, it should not impact their ability to win the election. A coalition between Labour and the SNP is very plausible. Nicola Sturgeon has said that whilst she would "never, ever put the Tories into Government", they "wouldn't rule out a coalition with Labour".

Conversely it is not obvious who the Conservatives could form a coalition with. William Hague all but ruled out a coalition with UKIP on CNBC last week. Another coalition between the Conservatives and the Liberal Democrats also seems unlikely.

Hence we could end up with a situation where the Conservatives win the most seats, but most of Parliament is united against them, leading to a Miliband/Labour led coalition including the support of the SNP – such a coalition is the most likely outcome according to calculations made by Deutsche Bank last week.

Either way, this election is going to be a fascinating one. It's the closest since 1992 and the next few months will see a lot of confusing political rhetoric. Whichever way it goes, I hope turnout is high and the result is convincing.

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Wilfred Frost is anchor of Worldwide Exchange on CNBC.

Follow him on Twitter: @WilfredFrost