Things may be looking up for Blair, but it is still not certain that he will fight the election

As any investment banker will tell you, share prices in ailing companies rarely go down in a straight line. The process of decline is typically punctuated by periods of stagnation, known by technical experts as a ‘false bottom’. But these treacherous episodes are not nearly as perilous as the moment when a share price in long-term collapse starts to rally. The first two or three tentative bits of good news can be readily discounted. But gradually observers on the sidelines get drawn in, concluding that the stock really has turned the corner. Then the bears or short-sellers start to panic, hurriedly buying back stock to cover their positions, driving the price up yet further. At this stage smaller investors get caught up in the general excitement, completing the virtuous cycle.

That is exactly how matters stand with Tony Blair this July. Ten weeks ago, with Iraq mired in gloom and Downing Street’s authority greatly diminished by the U-turn on the EU constitution, the Prime Minister was shot to pieces.