There is widespread speculation that the Conservatives and Liberal Democrats could reach a power-sharing deal by the end of the day.
That could result in anything from loose cooperation between the two parties to Britain’s first coalition government since World War Two.
The Conservatives won the most votes – and seats – in last week’s election…but crucially fell short of a parliamentary majority.
Jeremy Batstone Carr from Charles Stanley Research says, “A conservative and liberal-democrat coalition would provide – if it was workable – a sufficient majority in Parliament to push through measures that, I’m afraid, will be unpleasant and the voters will not like; the sort of measures that in a minority government situation would be very difficult to push through and will almost certainly encourage a vote of no-confidence very quickly”
Tory leader David Cameron is under tremendous pressure to end the country’s political deadlock amid growing jitters in the financial markets.
But electoral reform could prove a major stumbling block to cooperation with the Lib Dems. If the two parties can’t reach a deal, the Lib Dems could join forces with Labour but they would still need support from other, smaller parties to secure a majority.
Meanwhile embattled Labour leader Gordon Brown will remain in office as the country’s caretaker Prime Minister until the deadlock is broken.