UK opposition parties seek deal to form government

* Liberal Democrats say leader spoke to Labour PM Brown

* Conservative/Lib Dem deal not expected before Monday

By Avril Ormsby

LONDON, May 9 (BestGrowthStock) – Britain’s main opposition parties
will seek to overcome differences on electoral reform and other
issues on Sunday to break a political deadlock after last week’s
inconclusive election before financial markets lose patience.

David Cameron’s Conservatives won the most seats in
Thursday’s parliamentary election but fell short of a majority
to form a government and are seeking the support of Nick Clegg’s
centre-left Liberal Democrats.

It is the first election since 1974 where no one party has
won an overall majority, leading to horse trading that is
unfamiliar in British politics.

Teams from the Conservatives and the Liberal Democrats are
due to meet at 11 a.m. (1000 GMT) in an attempt to secure a deal
that would end 13 years of Labour rule.

The greatest stumbling block may well be electoral reform, a
long-cherished ambition of the Liberal Democrats who would win
far more seats if Britain switched from its winner-takes-all
system to proportional representation. The Conservatives are
firmly opposed to such a change.

A YouGov poll in the Sunday Times showed 62 percent of those
surveyed favoured a more proportional system of voting.

The parties must overcome other key differences on economic
policy, defence, immigration and Britain’s stance towards
Europe, but they could find common ground on issues such as
lower taxes for the poor and the environment.

Both say they will not be rushed, but are acutely aware of
the financial markets’ need for decisive action on the country’s
record budget deficit, running at more than 11 percent of
output.

It is unlikely a deal could be reached by Monday, a
Conservative spokesman said, noting that the party’s new members
of parliament, who will be briefed on the negotiations, would
not meet until Monday evening.

Prime Minister Gordon Brown, who continues to rule but
effectively was sidelined after he said on Friday that the
Conservatives and Liberal Democrats should be given the time
they needed to hold talks, nevertheless had phone conversations
with Clegg, the Liberal Democrats said on Saturday.

“At the request of the Prime Minister, Nick Clegg took a
call from Gordon Brown this evening. The conversation was
amicable,” they said in statement.

Clegg, who has to win his party’s support before any deal
can go ahead with either party, was locked in discussions with
party officials throughout most of Saturday, which his chief of
staff said had been “positive and productive”.
The leader also held a 70-minute meeting with Cameron late
on Saturday, which both parties said was “amicable and
constructive”.

Another key hurdle to a deal is agreement on the pace of
lowering the budget deficit. The Conservatives have pledged to
start cutting it immediately but the Liberal Democrats say this
could harm Britain’s recovery from a deep recession in
2008-2009.

If the Liberal Democrat/Conservative talks fail, a deal
between Clegg’s party and Labour is possible, but more
complicated as the two parties combined would still not have
enough MPs to command a majority in the 650-seat House of
Commons.

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For an overview of election stories [nUKVOTES]

For multimedia coverage, see http://r.reuters.com/quq44j

Graphic of gilt and stg reaction http://r.reuters.com/nec23k

Graphic of results http://r.reuters.com/hym23k

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UK opposition parties seek deal to form government