David Steel, the Liberal leader, announced yesterday that his party will end its support this summer for the minority Labor Party government.
The prospect was greeted with equanimity by Prime Minister James Callaghan, who knows he is still likely to find the votes he needs to survive any test of confidence.
The move is designed to strengthen the Liberals' fading election prospects. Steel has made it clear in private that he expects Callaghan to call a general election in October. Steel does not want his party caught still tied to Labor when that call comes.
In Paliament, Steel said the 14-month-old pact with Callaghan had achieved its end, providing stable government for "economic recovery" in general and a sharply lower rate of inflation in particular.
This put the best possible face on the deal. In fact, the 13 Liberals have been voting with the 305 Labor members in a Parliament of 635 to preserve themselves from extinction in an election.
In byelections for vacant seats, the Liberal showing has been disastrous, barely ahead of the National Front, an openly racist party. The latest opinion poll gives the Liberals 7 percent of those who responded, a figure that could reduce their numbers in Parliament to three or four.
Most who vote Liberal appear to be dissatisfied Tories. With a Labor government in power, these voters return to their natural home, the Conservative Party.
Many political observers here agree with Steel that Callanghan is planning to call an election this fall. The economy is running better than it has in four years; Margaret Thatcher, the militant Tory leader, seems to be a political liability except among the faithful; and the polls look promising. The most recent gives Labor a 48-43 edge over the Conservatives.
Some of the prime minister's advisers, however, are urging him to wait until the spring of 1979. By then, tax cuts should have worked their magic, increasing demand, output and jobs. Moreover, it is argued, memories of three years of falling incomes under Labor will be dimmer next year than this.
Steel said the pact will continue until Parliament breaks for its summer vacation, probably Aug. 3. Thereafter, the Liberals will not necessarily vote against the government but they will not be bound by a formal commitment.
Even during the agreement, Steel and company opposed Callaghan on tax and other measures. But the prime minister has usually found the allies he needed, especially among the 10 Ulster Protestants who are quite satisfied with the government's stance in Northern Ireland. Sometimes, Callaghan has simply been beaten in Parliament, much like an American president in Congress.
The British are not used to this, but other politicians may have to learn to adapt to it as Callaghan has. The rise of nationalist and sectarian groupings in the old Kingdoms of Scotland, Wales and Ulster could deprive bothmajor parties of a working majority for a generation.