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.