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UK parties to resume talks on power-sharing deal
Source: Agencies |
May 10, 2010, Monday
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BRITAIN'S two biggest opposition parties resume talks today to reach a deal to govern after an inconclusive election last week that has left markets anxious for a resolution to political deadlock.
David Cameron's centre-right Conservatives and the smaller Liberal Democrats will attempt to thrash out a deal that could lead to Britain's first coalition government since the 1970s.
The talks will centre on the best way to rebuild the economy after the worst recession since World War Two and cut the record budget deficit.
Gordon Brown, whose Labor Party has ruled Britain since 1997, remains prime minister while the negotiations continue and still hopes he can woo the Lib Dems and hold on to power.
The Conservatives won the most seats in Thursday's election, but fell 20 seats short of a majority in the 650-member parliament. They are seeking the support of Nick Clegg's third-placed Lib Dems, possibly in a formal coalition or a looser power-sharing deal.
Lib Dem sources said they were "positive and hopeful" a deal could be reached, according to Sky News.
The two sides have limited time to reach an agreement because financial markets, already worried by a Greek financial crisis, want a swift political agreement.
Finance minister Alistair Darling said the markets "understand perfectly" that talks were needed after the inconclusive result, but warned a deal must be agreed quickly.
"The key thing is to get a British government in place as soon possible," he told the BBC. "We don't want this to drag on. There comes a point when you have to decide whether there is a deal or no deal."
Analysts said markets would take solace from comments that reducing a deficit running at more than 11 percent of national output would be a key plank of any deal.
Financial markets were likely to be preoccupied with efforts to prevent the spread of the Greek debt crisis and give Britain's politicians a little more time to put together a deal, several analysts said.
"I think the markets will appreciate that it will take some time. They might stay hopeful. I suspect that what's influencing the equity markets in particular, more than anything else, is questions over Europe," said Deutsche Bank economist George Buckley.
Brown, whose Labor came a distant second in the election, remains in office in a caretaker role. He stands ready to try for an alliance with the centre-left Lib Dems if they are unable to agree with the Conservatives.
Clegg appeared to be keeping his options open, with news emerging that while the Conservative-Lib Dem talks were going on, he met in secret with Brown at a nearby location.
Markets want to see a stable government emerge quickly and start aggressively cutting the deficit. Sterling, government bonds and shares all sold off on Friday after the inconclusive election.
A major stumbling block to a Conservative/Lib Dem deal could be electoral reform, a long-cherished ambition of the Lib Dems who would win far more seats if Britain switched from its winner-takes-all system to proportional representation.
David Cameron's centre-right Conservatives and the smaller Liberal Democrats will attempt to thrash out a deal that could lead to Britain's first coalition government since the 1970s.
The talks will centre on the best way to rebuild the economy after the worst recession since World War Two and cut the record budget deficit.
Gordon Brown, whose Labor Party has ruled Britain since 1997, remains prime minister while the negotiations continue and still hopes he can woo the Lib Dems and hold on to power.
The Conservatives won the most seats in Thursday's election, but fell 20 seats short of a majority in the 650-member parliament. They are seeking the support of Nick Clegg's third-placed Lib Dems, possibly in a formal coalition or a looser power-sharing deal.
Lib Dem sources said they were "positive and hopeful" a deal could be reached, according to Sky News.
The two sides have limited time to reach an agreement because financial markets, already worried by a Greek financial crisis, want a swift political agreement.
Finance minister Alistair Darling said the markets "understand perfectly" that talks were needed after the inconclusive result, but warned a deal must be agreed quickly.
"The key thing is to get a British government in place as soon possible," he told the BBC. "We don't want this to drag on. There comes a point when you have to decide whether there is a deal or no deal."
Analysts said markets would take solace from comments that reducing a deficit running at more than 11 percent of national output would be a key plank of any deal.
Financial markets were likely to be preoccupied with efforts to prevent the spread of the Greek debt crisis and give Britain's politicians a little more time to put together a deal, several analysts said.
"I think the markets will appreciate that it will take some time. They might stay hopeful. I suspect that what's influencing the equity markets in particular, more than anything else, is questions over Europe," said Deutsche Bank economist George Buckley.
Brown, whose Labor came a distant second in the election, remains in office in a caretaker role. He stands ready to try for an alliance with the centre-left Lib Dems if they are unable to agree with the Conservatives.
Clegg appeared to be keeping his options open, with news emerging that while the Conservative-Lib Dem talks were going on, he met in secret with Brown at a nearby location.
Markets want to see a stable government emerge quickly and start aggressively cutting the deficit. Sterling, government bonds and shares all sold off on Friday after the inconclusive election.
A major stumbling block to a Conservative/Lib Dem deal could be electoral reform, a long-cherished ambition of the Lib Dems who would win far more seats if Britain switched from its winner-takes-all system to proportional representation.
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