Hard to say. There's already been a skirmish between the two over the Marlinist refugees, though neither side really wanted that escalating further.
The Empire probably is aware that in an all-out fight it would almost certainly lose - it may have slightly more systems now, but it has only about half the manufacturing base, its military technology is generally inferior to the Federal equivalents, and it has less ability to hire mercenaries.
Equally, the Federation is being torn apart from within by its own struggles, and has systems defect from it daily - any victory over the Empire would come at a massive cost in lives and resources, and probably lead to its eventual collapse too.
That won't stop it happening, necessarily - and both Utopia and Sirius are concerned enough by the possibility (for rather different reasons, I suspect) as to try to de-escalate things further - but it's going to need a fairly significant spark at the moment. It wouldn't surprise me if there was one before the end of the year, though...
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In practical terms, how such a war would be represented in-game is tricky to imagine: there are a bit over 4,000 systems on each side, and neither Powerplay nor the BGS nor CGs are really set up to deal with that sort of all-out conflict on that scale.
BGS problems:
- deals system-by-system so a hundred-system battlefront would be tough to represent
- doesn't have any meaningful representation of logistics overheads, so the side that wins the first battle is probably going to win the rest too, it'll just take ten years to prove it
- superpower support for individual member factions is not well-represented
Powerplay problems:
- Powerplay control officially doesn't mean anything and is largely irrelevant to the underlying superpowers
- Powerplay strategy is highly counter-intuitive and so any victories in the official war might end up being countered by a logistics collapse elsewhere
CGs:
- a fair bit of per-event effort for Frontier, and one battle a week is hardly a good representation of a major war
- we all know who's going to win already