Who wins in a hung parliament? It depends...

The election results are in, but we may not know who has really won for months yet.

Last Updated: 31 Aug 2010

Well, that’s that - the hardest-fought general election campaign for a generation is over. Except of course that it isn’t – the people may have spoken but they did not do so with one voice. In fact it could hardly have been a less conclusive result - there’s no clear winner, and thanks to the last-minute collapse of the Clegg bubble, the most obvious route to a coalition majority is a no-goer too. It’s a poser to be sure.

As the leader of the largest single party, David Cameron is still 20 seats short of an overall majority, not exactly a ringing endorsement of his ‘vote for change’ mantra. But he’s done better than anyone else – Labour has lost getting on for a hundred seats, and it’s surely only a matter of time before Gordon Brown leaves Number 10 – and possibly national politics – for the last time. Brown is ready to offer the LibDems a deal on electoral reform, but seems resigned to the fact that the Tories should have the first go at forming a government.

Meanwhile, the glory days of a couple of weeks ago must seem like ancient history over in the LibDem camp, where Cleggmania has been replaced by Cleggmisery today. Despite doing so well in the first debate, the party polled exactly the same share of the vote as last time, and managed to lose a few seats just for good measure. Nobody won this election, but you could say that the Lib Dems lost it.

In the City, the news has gone down about as well as the arrival of a summons from the SEC at a Goldman Sachs client party. The pound in particular has taken a beating, down 0.5% against the dollar to $1.47 and 1.5% against the Euro to 1.15. This latter despite the continuing aggro over the Greek bailout.

As many commentators have pointed out, the election result is about as bad as it cold be from a market sentiment point of view – strong government of any hue being vastly more to international investors’ tastes than the horsetrading and vacillation of a hung parliament.

So what’s going to happen? Well, Cameron is sure to have a go at forming a government of some kind, whether in coalition or as a majority. He has already said as much, vowing to govern as best he can ‘in the national interest’. He is thus set to be the next PM one way or another.

But his only chance of majority rule – and of getting to occupy Downing Street for anything like the full five-year term – is to forge an unholy alliance with the LibDems.  A pretty tall order – a poll this morning by Conservative Home estimates that 94% of Tory grass roots supporters want nothing to do with Clegg and his bunch of Euro-loving pinkoes.

In his favour, Cameron can probably count on Clegg’s support – despite having said the opposite only a few days ago. Nice Nick’s only way to salvage anything from the dismal LibDem performance is to hook up with Cameron in return for a promised referendum on electoral reform. But he won’t find it easy to persuade his party to swallow such a deal either.

The alternative is a minority Tory caretaker government and another election, probably next year. Hardly a glorious prospect, given the urgency of action required to tackle our debts and get economic growth back on the menu.

It’s true what they say about democracy – it really is the worst form of government, apart from all the other ones.

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