The UK won’t be getting a left-wing grand coalition after all, after five days of party negotiations in the wake of inconclusive elections and a mounting fiscal challenge.
UK gilts and sterling promptly rallied on Tuesday.
As the BBC reported in its live election coverage:
Number 10 recognises that talks with the Lib Dems have not and will reach not any positive conclusion, and they are now discussing the method of declaring that their side of the negotiation is over, BBC Radio 5 Live’s political correspondent Jon Pienaar says.
(H/T Bryce Elder)
London’s Evening Standard meanwhile reported that Prime Minister Gordon Brown has resigned to make way for the Conservatives’ David Cameron, who is now set to make a deal with the Liberal Democrats to forge a stable government. A spokesman said that Mr Brown remained prime minister, Sky News reported.
Cable promptly punched through 1.48 on the news, as this chart shows:
While gilt futures also revived, via Reuters:
RTRS-UK GILT FUTURES RALLY TO SESSION HIGH ON REPORTS TALKS BETWEEN LABOUR AND LIBDEMS “TEMPORARILY” OVER
Perhaps not so temporary…
Related link:
Somewhere, over the rainbow… a UK downgrade – FT Alphaville