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In the general election held on 15 January 2008, the Barbados Labour Party was defeated by the Democratic Labour Party, winning ten seats against 20 for the DLP.
DLP leader David Thompson was sworn in on 16 January, succeeding Arthur.
Despite the party's defeat, Arthur was re-elected to his own seat from St. Peter constituency with 65 % of the vote.
He also said that he felt he could still contribute to CARICOM.
On 19 January, he stepped down as BLP leader, saying that he felt an immediate leadership transition would be in the best interests of both the party and Barbadian democracy ; former Deputy Prime Minister Mia Mottley was chosen as the new party leader.
Arthur said that he intended to serve out his parliamentary term.

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