election even though the party's hold on power is "more tenuous than ever'', the analytical service states in its second quarter country report on Bermuda.

The Economist states Premier Pamela Gordon's cabinet shake-up may help to shore up support among younger, black voters while at the same time the party is buoyed by a strong economy.

Still the defection of UBP backbencher Grace Bell to the PLP hurt the ruling party.

"However the PLP does not seem to be able to take advantage of the UBP's weakness,'' the service concludes. "It has so far failed to get a consistent message across to voters. The long-time Shadow Finance Minister, Eugene Cox, has not yet come up with a coherent economic policy agenda, preferring to maintain the party line that the PLP will study and consult on the issues before making any moves.'' The service also notes Bermuda is making adjustments to its regulations in an attempt to remain competitive as an international business centre.

"Government policy is to maintain Bermuda's image as a home for respectable `blue-chip' enterprises with `light but effective regulation','' the Economist states. "Whether the Island can maintain this balance in he face of international pressures against the tax and regulatory advantages of offshore jurisdictions will be the challenge facing Bermuda in the years ahead.'' POLITICS PTL BUSINESS BUC