Tony Blair's Labour party has won a third consecutive term in government, the first time the party has done so in its history.

Exit polls taken before college counts up and down the UK showed that Labour's House of Commons majority could have been slashed from 167 seats in 2001 to a mere 50 or sixty this time around.

At time of writing that figures looked more like 70-75, with gains of around 35 seats to the Conservative party and perhaps a dozen to the Liberal Democrats. In terms of the popular vote, Labour edged it with 36% compared with the Tories' 33% and the Lib Dems 23%.

Labour leader Blair admitted that the Iraq war was a divisive factor among the electorate, but he called for unity now that voting is over. Summing up the result, Blair said it was clear that "the British people wanted to return a Labour government but with a reduced majority."

Pundits were split on whether the result was a 'win for everyone': Labour victory and gains for the two opposition parties, or a loss for everyone: reduced Labour majority and only a mild increase in influence for the opposition.

The business point of view was broadly in favour of the result. While in general, most bosses would vote Tory, what analysts say they really appreciate is stability and consistency, something that Labour's return to power could safeguard.

But now questions will inevitably turn to: what next? Tony Blair, and in particular Gordon Brown, face an uphill struggle to maintain the government's track record for a strong economy.

On top of pressing issues such as the pensions crisis - a problem that failed to show up in campaigning - and a likely rise in taxes - potentially national insurance contributions again, Labour faces businesses' wrath over the UK's frail transport system and the apparently steep public debt.

Summarising the chancellor's predicament, Douglas McWilliams, chief executive of the Centre for Economics and Business Research, said: "We do not yet see anything that could be called a recession. But retail is edging down and the world economy is softening.

"Government expenditure has picked up in recent weeks but this can only be temporary. The economy has been kept moving forward by business spending - on suppliers, consultants, advertising and IT as well as continued investment in construction.

"This is likely to soften during the second half of the year. So without statistical revisions, Mr Brown will miss his growth targets and he will have difficulty with his borrowing targets."