THE result of the local elections in England was either “a melt-down” or “could have been worse” outcome for Labour, depending on one's viewpoint; “the best result for 14 years” for the Conservatives, in London especially; and a disappointing standstill for the Liberal Democrats. The far-right British National Party won 50 seats across the country and 11 of the 13 it contested in East London. The election was followed immediately by a drastic Cabinet shuffle in which Mr Blair dispensed with the services of his Home Secretary, Charles Clarke, and demoted Jack Straw, formerly Foreign Secretary, and Geoff Home, formerly Leader of the House of Commons. John Prescott, a figure of abuse and ridicule following revelations of an extra-marital affair with a member of his staff, remained as Deputy Prime Minister but lost his departmental responsibilities. The prime minister of France, Dominique de Villepin, was in trouble because of allegations that he was involved in a “dirty-tricks” operation to smear his nearest political rival, Nicolas Sarkozy. Although he denied the allegations M. de Villepin's poll ratings continued to slump and he seemed in danger of rivalling Edith Cresson's record as France's least-popular prime minister. In Italy Silvio Berlusconi finally resigned, three weeks after losing the general election while his successor as prime minister, Roman Prodi, continued to insist that he would be able to run the country efficiently despite the widely-varying policies of members of his coalition. Ehud Olmert, Israel's new prime minister succeeded in forming a coalition government in which the Labour leader, Amir Peretz, will be defence minister. Mr Olmert said that Israel's borders would have to be redrawn, with or without the co-operation of the Palestinians. The Canadian dollar edged above 90 American cents for the first time in almost 30 years following the Conservative minority government's budget which included proposals for 29 tax breaks.