UK parties to resume government formation talks

LONDON (Reuters) – Britain’s Conser-vatives and   Liberal Democrats will hold further talks today to try to  stitch together a deal to govern, with markets anxious for an  agreement following an inconclusive election.

Britain has been stuck in an unfamiliar political limbo  since Thursday when David Cameron’s centre-right Conserva-tives  emerged as the largest party in the election but fell 20 seats  short of an outright majority in the 650-member parliament.

Analysts say markets, preoccupied with efforts to prevent  the spread of the Greek financial crisis, will give the  politicans only limited breathing space to cut a deal.

They will have taken solace from comments from the  Conservatives and centrist Lib Dems, led by Nick Clegg, that  tackling a deficit running at over 11 per cent of national output  would be a central part of any agreement.

“If the markets were less fragile and nervous at the moment,  I think they would be very likely to give the parties the  benefit of the doubt and more time to sort things out,” said  Howard Archer, Chief Economist at IHS Global Insight.

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