UPDATE 3-Inconclusive poll may drive UK to IMF-Conservatives

* Conservatives say hung parliament would hurt economy

* Prime Minister seeks common ground on reform with Lib Dems

* Lib Dem leader says Labour had 13 years to make changes

(Recasts with Conservative warning)

By Matt Falloon and Avril Ormsby

LONDON, April 21 (BestGrowthStock) – Britain’s Conservatives warned
voters an inconclusive election could force the country to seek
IMF help, after polls on Wednesday showed the opposition
centre-right party may be unable to form the next government.

The Conservatives once looked certain to end 13 years of
Labour government but a surge in popularity for the Liberal
Democrats — Britain’s third biggest party — has raised the
chances of a coalition administration after the May 6 vote.

Under Britain’s first-past-the-post electoral system, some
polls suggest Labour could win the fewest number of votes of any
major party but still end up with the most seats in parliament,
and then possibly join forces with the Liberal Democrats.

The Conservatives, who have long argued that failing to take
immediate action on a record budget deficit risked propelling
Britain into a Greek-style crisis, warned on Wednesday that a
so-called hung parliament could be a recipe for disaster.

“If the British don’t decide to put in a government with a
working majority, and the markets think that we can’t tackle our
debt and deficit problems, then the IMF will have to do it for
us,” Conservative business spokesman, and former finance
minister, Ken Clarke told reporters.

Clarke said financial markets would not wait patiently while
politicians haggled over the terms of any coalition and
Conservative finance spokesman George Osborne warned that
political deadlock could tip Britain back into recession.

Both the Liberal Democrats, who have not said who they would
prefer to team up with, and Labour accused the Conservatives of
scare-mongering. Markets appear to have grown more comfortable
with the idea of a coalition government in Britain.

“Let’s not forget that there is general agreement that
fiscal policy needs to be tightened amongst the main parties,”
said David Owen, chief European financial economist at Jefferies
Fixed Income.

LIB DEMS REBUFF OVERTURES

Britain’s election sparked into life last week after Liberal
Democrat leader Nick Clegg outshone his better-known rivals —
Prime Minister Gordon Brown and Conservative David Cameron — in
the first of three televised leaders’ debates.

Because of the way the bigger parties’ support is spread
across the country, Clegg will do well to increase the number of
Liberal Democrat seats to about 100 from the current 63, but
even that shift could have big consequences for the other two.

Two polls on Wednesday indicated Labour would be the biggest
party in parliament but fall short of an overall majority and
probably need the support of the Liberal Democrats to govern.

But Clegg rebuffed an attempt by Brown to find common ground
on political reform on Wednesday and said his move smacked of
desperation ahead of the election.

Speaking to the Independent newspaper, Brown sought to cast
Labour as the agents of “new politics”, highlighting his party’s
manifesto pledge to hold a referendum on voting reform.

The Liberal Democrats, who have campaigned for reform to a
voting system that favours the two larger parties, said Labour
could not be trusted to deliver on reform.

“There is something frankly desperate about a Labour Party
and their leader Gordon Brown who now tries to present
themselves as agents of reform and progress when for 13 years
they have been a stubborn block on reform,” Clegg said.

Brown, Cameron and Clegg will clash again on Thursday
evening in the second televised debate. Clegg can expect a rough
ride from his two rivals who are keen to put him in his place.

Academic Philip Cowley, professor of parliamentary
government at the University of Nottingham, told Reuters: “It’s
perfectly normal in European politics for parties to slag each
other off for the weeks of the campaign and then come together
at the end to do a deal.”

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click on [ID:nUKVOTES]

– To see the latest stories about the UK, click on [TOP/GB]
or visit http://link.reuters.com/quq44j for multimedia coverage

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(Additional reporting by David Milliken and Caroline Copley;
Editing by Charles Dick)

UPDATE 3-Inconclusive poll may drive UK to IMF-Conservatives