Opinion: British election update: Brown, Clegg and Cameron -- and financial markets -- take stock of a stalemate

This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.

Seventy-two hours after the last vote was cast in the British general election, the country still did not have a government.

A deadline to announce a working partnership before the open of the financial markets on Monday has passed, leaving Britain’s political future very much uncertain.

Pre-election predictions of a hung parliament – which last occurred in 1974 -- and a plunge in the value of the pound are looming ominously as Europe’s financial system already toils under the weight of mounting debt concerns.

The focus remains on the leaders of the three main political parties and their attempts to broker a power-sharing deal that they each can sell to their own parties.

The Conservatives won last week’s election over Labor and the Liberal Democrats but did not secure enough votes – or seats -- to get an overall majority that would allow them to govern under Britain’s ‘first-past-the-post’ voting system. The Conservative leader, David Cameron, has for much of Sunday been in talks with the Liberal Democrats’ mercurial leader, Nick Clegg, who now takes on the role of kingmaker.

Incumbent Prime Minister Gordon Brown, meanwhile, remains in Downing Street until he can broker a deal himself, is forced to resign or is taken down from within his own party ranks. Britain’s ruling party traditionally gets first try at forming a coalition government, and Brown has talked with Clegg at least twice over the weekend.

But Clegg opted to talk first with the Conservatives as together the two parties could form an administration with a working – if fragile – majority. The combined Labor and Liberal Democratic vote falls short of a majority, and any deal would likely have to include regional parties in Scotland and Ulster, an even more fractious solution.

Any Labor-Lib Dem deal likely would result in the ousting of Brown as leader under terms dictated by the Lib Dems.

For his part, Clegg would have a very hard time selling any deal that doesn’t include voting-system reform to his own party. As the third party in the political spectrum, the Liberal Democrats strongly favor a referendum on a change from the current electoral system to one of proportional representation.

A collaboration between the Liberal Democrats and Conservatives is an unlikely fit -- the Conservatives have largely ruled out the idea of a serious stab at voting-system reform -- and would be considered a partnership of convenience rather than marriage of political ideologies. Any partnership with Labor would be considered a “partnership of losers” and would be struck on a very uncertain parliamentary footing.

The quagmire has resulted in many of the parties’ faithful turning their ire on their own leaders. Cameron has been roundly criticized for failing to win an absolute majority and must seal a deal that stifles any sniping from the sidelines, because if he gains the reins of power he will be operating with a razor-slim majority. Clegg’s superstar status has evaporated after a disappointing poll result. And Brown remains, well, Brown.

In the event of a breakdown in talks with the Liberal Democrats, Cameron may yet opt to dispose of Brown’s administration through a vote of no-confidence and form a minority government.

Such interminable wrangling, of course, would send bad signals to the financial markets. The deadline for a deal before Monday morning has already passed, but the prospect of a political stalemate and another poll, perhaps in October, may do immeasurably more damage to Britain internationally. Britain remains outside the euro currency bloc and the pound is seen as vulnerable to speculators.

In 1974, the hung parliament after a closely run election between Ted Heath’s Conservatives and Harold Wilson’s Labor resulted in Heath resigning after failing to strike a deal with the Liberal
Democrats, and Wilson running an unpopular minority government that lasted just eight months (until Wilson called another election that won him a small majority).

But the damage caused by a succession of weakened ruling parties is widely believed to have adversely affected Britain’s international prominence until the emergence of Margaret Thatcher on the country’s political scene five years later.

All three party leaders have pledged to work with Britain’s “national interest” foremost in their agenda. Whether they do or not -- or lapse back into partisan squabbling -- like any hint of a political deal remains to be seen.

-- Craig Howie

Caption: Liberal Democrats leader Nick Clegg is flanked by the media and other animals on Sunday. Credit: The Associated Press