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QUEST MEANS BUSINESS
Britain About to Get a New Government
Aired May 11, 2010 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ADRIAN FINIGHAN, HOST, QUEST MEANS BUSINESS: Britain on the brink of a new government. A deal looks eminent.
And the euro's downward slide; euphoria over the bailout fades fast.
Hello, I'm Adrian Finighan in for Richard Quest. This is QUEST MEANS BUSINESS.
Good evening. You join us as the pace of events surrounding the U.K.'s inconclusive election quickens. We could find out very soon what the next British government will look like after days of uncertainty. Tonight on QUEST MEANS BUSINESS the negotiations between the Conservatives and Liberal Democrats that could be coming to a conclusion.
Well, it's been a day of non-stop negotiations for Liberal Democrats leaders. Their party holds the balance of power after that inconclusive election last week. First up, today, they held discussions with the governing Labour Party, but that ended without an accord. They then renewed their talks with the Conservatives. Now, the expectation is that an agreement is about to be announced.
Paula Newton is at the Cabinet office, here in Central London, where Conservative negotiators are meeting with Liberal Democrat negotiators. They have been ensconced in that round of negotiations for, what? Five, coming up on six hours now?
Paula, there is sense here that there is a renewed sense of momentum that we may well be close to a deal and finding out who is going to govern Britain.
PAULA NEWTON, CNN INT'L. CORRESPONDENT: Before the night is out here, Adrian, we could have a new prime minister in this country. There was a great sense of buzz, anticipation, excitement about what is going to go on. We do expect negotiators to come out within the next half hour, perhaps say something, perhaps not.
The schedule goes like this: The Liberal Democrats need to brief their party at 7:30, that is about a half an hour from now. Within an hour then, it is the Conservatives up and they will brief their party and their MP. But if, in the meantime, Adrian, we're told that Gordon Brown gets a sense that David Cameron believes he has the support in order to form some type of a government that may mean that Gordon Brown will resign. He'll have to go to Buckingham Palace to officially resign this evening and that will mean that David Cameron will be asked by the queen to form a government, again, all by midnight tonight.
Adrian, you know, what this time yesterday we thought that perhaps still a Liberal Democrat deal with Labor was possible. The entire thing has been turned on its head, once again, no one knows where this is going but at the end of the day, the kind of government, whether it is minority or a coalition government is material especially to the markets, as they look forward to the opening tomorrow and what kind of a government they're going to face in Britain.
FINIGHAN: Paula, five days after that inconclusive election, we have had days of tense negotiations. As I said, the Liberal Democrats are holding the balance of power. It seemed earlier today that their discussions with Labour Party, Gordon Brown's Labour Party, were coming to nothing. That swung momentum decisively in favor of David Cameron's Conservatives, if indeed we do get that deal. I mean, it's now 7:00 o'clock in the evening here in London, are we likely to get Gordon Brown coming out of Downing Street tonight? Are we likely to see David Cameron assuming mantel of prime minister tonight? Or is it all going to wait until tomorrow morning? What is the sense you are getting?
We appear to have lost Paula. She is standing outside the cabinet office, which is just around the corner from Downing Street, on White Hall, which of course houses many of the government departments. If you walk to 50 meters down the street and turn in through the gates, you get to Downing Street. We're looking at an aerial shot now of Downing Street. Paula, just a few yards away from that, on the other side of the building on the right of the screen, inside Downing Street, among the press melee.
I've never seen so many press inside Downing Street. They've had to build a complete-sort of-almost like a sports stadium, tiered audience barrier for the press to get on. Inside of that press melee, is CNN's Max Foster, in Downing Street.
Max, last time we knew that Gordon Brown was going to come out, just a few days ago, when he made that offer to negotiate with the Liberal Democrats because they brought out a lectern. There is still no sign of that in Downing Street. Do we get a sense that perhaps there will be some sort of an announcement from the prime minister tonight?
MAX FOSTER, CNN INT'L. CORRESPONDENT: I think the sense is the next thing needs to come from David Cameron, if he has managed to do this deal with Nick Clegg. Because it became clear some hours ago that the talks with Labour-the Liberal Democrat/Labour talks had broken down, and they weren't going anywhere after a lot of Labour backbenchers basically said they didn't really like the idea. We haven't heard anything from Labour since. So, I think the sense is that David Cameron needs to come out and say he's done a deal with Nick Clegg, before Gordon Brown can actually come out and resign. Obviously, he can't resign before he knows there will be a new government formed.
FINIGHAN: Of course, these things have to handled with the usual British protocol. What happens once it looks as though David Cameron can form a government? Gordon Brown has to then, what, go and see the queen. Will that happen tonight?
FOSTER: Well, we don't want to speculate on this do we Adrian? You and I have been covering it all along and there are so many twists and turns, it changes all the time. But if things carry along their current course, as everyone expects and we haven't had any denials that this may happen, then what we would expect to happen is that David Cameron will come out and announce that he's done some sort of deal with the Lib-Dems, and that would have to be approved by the parties. And then after that Gordon Brown would be informed. He would go up to Buckingham Palace, meet the Queen, resign, come back here, leave. David Cameron would go up to the palace and he would be appointed the new prime minister and come back here and make a speech.
FINIGHAN: All right, Max, for the moment. Max Foster, there, live in Downing Street, here in London.
As we said the pace of events surrounding the final outcome of that disputed U.K. election has quickened in the past few hours. If anything happens while we're on the air here with QUEST MEANS BUSINESS, you'll be the first to hear about it. We'll bring it to you live.
Well, the pound is rallying strongly against the dollar right now as traders anticipate some sort of announcement here in London. Right now, sterling up nearly 1 percent. It is hovering just below $1.50. CNN's Jim Boulden has been watching developments on the currency markets this session.
It has been a bit of a roller coaster ride, hasn't it?
JIM BOULDEN, CNN INT'L. CORRESPONDENT: It has. And it easy, because you look at that $1.50 and that is what you are looking for to see whether the pound can gain strength and get there. Because we have seen it go to about $1.46. And it pops and then it falls every time.
The larger issue of Greece and the whole economic reform and budget deficits are affecting it as well. But that is also part of this story. Which is, if you get a Conservative government here they have vowed to start cutting the budget deficit quicker than the other parties, so that is part of all of this.
FINIGHAN: I want to talk to you about the euro in just a moment, but it would be interesting to see if we were talking now about the possibility of a Labour/Liberal Democrat coalition. That they were nearing a deal, would the reaction to the pound, do you think, be as strong as we've seen with the possibility of a Labour/Conservative coalition?
BOULDEN: Well, we saw that yesterday when Prime Minister Gordon Brown came out and said that they were in discussions with Liberal Democrats, then we saw the pound falling.
BOULDEN: You know, this isn't surprising though, I mean, what really happened is we expected this kind of hung parliament outcome from the election. But just a day or two before the election we started to see the pound selling off. Some people were fixing their positions ahead of the election, not because they were making huge predictions about what would happen, but they just didn't want to get on the wrong side of the trade. So, we saw especially in New York. I remember seeing that-people were just saying, let's sell out now, let's be careful, let's be conservative. Especially after that drop on the Dow, that crazy day, and then go back.
FINIGHAN: I was saying just a couple of moments ago, when we were talking to Max, that the last time anything happened, when Gordon Brown made that momentous announcement-that offer to the Liberal Democrats, they brought out a lectern on Downing Street-and look what's happened, as we've been speaking, Jim, they have brought a lectern out into Downing Street, which means that some sort of announcement from the prime minister is perhaps eminent.
In the meantime, Jim, the euro, we'll talk more about the euro on the program in just a couple of minutes.
FINIGHAN: But the euro is in this mix, this roller coaster ride of currencies that we've seen today. And the euro plummeted after the euphoria we saw yesterday.
BOULDEN: Yes, I want to be careful about this, because what we had was we had the problems with the euro last week. It is a long trend slide against the dollar, no doubt about that. It has been losing value for months, as things got worse last week it started to hurt even more. And then you get the little upticks and down ticks as it goes. And then we had this euphoria yesterday. It was-a lot of people say you oversell you, you over buy, you over this, you over that. So, maybe things go too hot and heavy yesterday.
BOULDEN: So, things calmed down a little bit today. I don't know that it is anymore than that.
FINIGHAN: All right. Jim, stay with me, because we may well come back and talk some more about this, but first of all I want to go straight back to Downing Street and CNN's Max Foster.
Max, we were speaking just a couple of moments ago, I think I tempted fate, there talking about the lectern. No sooner had we discussed it, then the brought one out. So, it looks like something is happening, yes?
FOSTER: Yes, you can normally see that Gordon Brown is going to come out. This is the normal format of events. We have the same people coming out with the lectern, getting things ready. They are doing some sound checks. Gordon Brown coming out. He's going to say something, isn't he? We don't know quite what it is. We were expecting to hear from David Cameron first. But maybe Gordon Brown has had a tip off that at deal had reached of some sort. Maybe things have turned around yet again, Adrian, and the Labour Party is stepping in and they are talking to them again. That seems extremely unlikely.
The most likely series of events from here is that David Cameron and Nick Clegg have reached some sort of deal to form a new government and Gordon Brown will no longer be the prime minister, possibly tonight, possibly tomorrow. Not quite sure. We need to hear it from him. I'm wondering if we'll hear from David Cameron, eminently. I'm looking at Paula down there at the other location where David Cameron is, and we don't expect anything to happen there. So, it looks as though this is where the story goes next.
Gordon Brown, in the building, we know, Peter Mandelson, Adrian, came in not long ago. He-seems as though they are the only two senior ministerial colleagues in there right now. The rest of the ministers left earlier on. One can only imagine, Adrian, the atmosphere in there right now.
FINIGHAN: Yes, absolutely. I had hear reports that the mood had lightened inside Downing Street. That the prime minister was joking with his closest staff and they were peals of laughter. It seems that the realization had set in once those talks with the Liberal Democrats were going no where. That his time was up, it was time Gordon Brown came-excuse me-to move on. And it was just a question of waiting for the Liberal Democrats and the Conservative negotiators, around the corner in the cabinet office, to reach some sort of deal.
Max, I hope that we're managing to convey some sense of excitement here, to our viewers around the world who may be slightly puzzled at why we are going so overboard on the U.K. election, here. But I mean, I can't remember a U.K., certainly not in lifetime, anyway, being this exciting. And I think there is a precedent for a leader going to Downing Street, an incumbent leader, going to Downing Street and tendering his resignation. I think 7:00 p.m. is the latest that the Queen has in the past accepted a prime minister's resignation, and then appointed a new prime minister. It looks as though we may well get that happening tonight. The Queen setting a new precedent by meeting a prime ministerial, a new prime minister and the old prime minister quite late into the evening.
FOSTER: Yes, there is some sense of shock about that, I have to say, Adrian, that the Queen would be expected to stay up so late. But as you say, very unusual circumstances, in this country we tend to have an election result the day after the election. One party has a clear majority, come straight into Downing Street, it is all done and dusted (ph) within 48 hours. What's happened this time, five days on from the election, we haven't actually haven't got a result and there's been all this horse trading. Everyone has been toing and froing,
Labour made the decisive move today by pulling out of those negotiations or maybe the Lib-Dems pulled out of them. We know that the talks broke down. So, desperate measures now, really, to get some sort of deal done. The markets aren't happy. I know that you have been reporting about some sensitivity there. So something has to be done as soon as possible. And the real sense is certainly, as I understand it from the Liberal-Democrat camp, that if a deal is reached, David Cameron being the head of a new coalition majority party, government, then Gordon Brown can't stay in power overnight. What if something happens overnight? It has to be the elected prime minister that is in power. So, Gordon Brown, yes, would have to-here we go.
There are some cars coming up here. This would indicate that there maybe a drive about to take place, possibly to the palace. One wonders. What does surprise me here, Adrian, is that the lectern is out before Gordon Brown has gone to the palace. If he is going to the palace, normally you'd-normally you'd have him go to the palace and maybe come back and say, I've resigned. But actually it looks as though we're going to have the speech before we go to the palace, if that is what is going to happen.
We're speculating a bit, Adrian, but I think we can. Because we haven't had any denials from the Labour press team about our speculation. And you know what they're like. They're on top of us and they brief us all the time. And we haven't been briefed, otherwise, as it were.
FINIGHAN: And, Max, also, we have had senior Labour Party politicians coming out throughout the day and congratulating David Cameron and saying things like, well, we're keen now to get onto the-on with the job of finding a new leader and rebuilding the Labour Party, so that we are in a strong position going into the next election, which many of course, feel maybe only perhaps a year or so away.
FOSTER: Yes, it does really depend on how things go over the next year, doesn't it? I mean, any new government is going to have a very, very tough time. Because they are going to have to install some massive cuts to deal with the deficit. It is going to be very uncomfortable in the following year for any future government. If it is David Cameron he's going to have a tough year. Add to that, there may be a coalition or some sort of agreement between parties in order to stay in power. And it is a lot more fragile than it has been over the past couple of decades in power, here in Downing Street.
So, possibly there would be another election soon. It does depend on how much-how strong, really, how stable this new government will be. And it is generally agreed the most stable government would be Conservative lead government with support from the Liberal Democrats, because under that agreement they would have well over half the seats in parliament. They would manage to get laws introduced and through that way.
Whereas if it were a Labour led coalition it would be a rainbow coalition, there would be all sorts of parties and interests to deal with every time they introduced some legislation. So, the most stable outcome probably is the conservative government. We'll have to just see how that lasts over the test of time, in extremely difficult circumstances.
I just want to turn the camera around for a moment, if I can. I know we have another shot on the lectern, so we can keep an eye on that. We can see the cars being lined up here. And I can't confirm that that is the prime minister's car, but it looks very much like it. He certainly is followed by a Range Rover most of the time, with his security. So, it looks to me like a drive is going to take place, we can speculate, I guess, on where that drive is going to be to.
Gordon Brown expected then to come out here at 10 Downing Street, and speak to the lectern you see presented there. The world's press is gathered here, much of the public is gathered at the end of the street. This is truly and exciting moment in British politics because we've had five days of toing and froing, a some sort of political deal is reached to run a government in the United Kingdom. This could be the decisive moment, Adrian, some people say it could have been the end of the week. Maybe it is sooner than expected by some.
FINIGHAN: Yes. Thank goodness. I spoke to one veteran British political journalists on the day after the election, on Friday, who said, "Look, you ain't seen nothing like this. It is going to be the most exciting British election in years.
Max, you mentioned about the form of the government that might be formed, the Conservatives and Liberal Democrats might be able to cobble together. Do you think it will be a coalition? I mean, there have been rumors, conjecture today, that there may be as many as six Liberal Democrats seats in the Conservative cabinet, others say no, there won't be anything of the sort. There will be no Lib-Dems possibly-
FOSTER: Adrian, just a moment. We are just going to show you-
FOSTER: We're just going to take you to the end of the street, Adrian, because we've got the staff coming out. That is staff from Downing Street coming out. Pretty significant moment. You'll recognize that from other prime ministerial step downs in the past, I think, Adrian. I mean, all the signs here are that the prime minister is about to come out and announce his resignation. But, you know, we haven't got that confirmed. It is speculation on my part, but all the signs are that we are going to get a major announcement here any moment from Downing Street.
With everything that has happened, then I think we can all assume that the Conservatives and the Liberals have reached some sort of deal. The deal, as you say, can come on different levels. It could be a full coalition, which would mean Nick Clegg would have a cabinet post. It would mean Vince Cable would have a cabinet post. Or it could be a looser agreement, where you would have a situation-here we go, Gordon Brown, and his wife, Sarah.
GORDON BROWN, PRIME MINISTER OF BRITAIN: As you know, the general election left no party able to command a majority in the House of Commons. I said I would do all that I could to ensure a strong, stable and principled government was formed, able to tackle Britain's economic and political challenges effectively. My constitutional duty is to make sure that a government can be formed following last Thursday's general election. I've informed the Queen's private secretary that it is my intention to tender my resignation to the Queen, in the event that the Queen accepts, I shall advise her to invite the leader of the opposition to seek to form a government. I wish the next prime minister well, as he makes the important choices for the future.
Only those who have held the office of prime minister can understand the full weight of its responsibilities and its great capacity for good. I have been privileged to learn much about the very best in human nature, and a fair amount, too, its frailties, including my own.
Above all, it was a privilege to serve. And, yes, I love the job, not for its prestige, its titles and it ceremony, which I do not love at all. No, I loved the job for its potential to make this country I love fairer, more tolerant, more green, more democratic, more prosperous and more just, truly a greater Britain.
In the face of many challenges in a very few short years challenges up to and including the global financial meltdown, I have always strived to serve, to do my best in the interest of Britain, it's values and its people. I would like to add one thing, also, I will always admire the courage I have seen in our armed forces. And now that the political season is over, let me stress that having shaken the hands and looked into their eyes, our troops represent all that is best in our country, and I will never forget all those who have died in honor and whose families today live in grief.
My resignation as leader of the Labour Party will take effect immediately, and in this hour I want to thank all my colleagues, minister, members of parliament. And I want to thank, above all, my staff who have been friends as well as brilliant servants of the country.
Above all, I want to thank Sarah, for her unwavering support, as well as her love. And for her own service to our country. I thank my sons, John and Frasier (ph), for the love and joy they bring to our lives. And as I leave the second most important job I could ever hold, I cherish even more the first, as a husband and father. Thank you. And good-bye.
FINIGHAN: There you have it, Gordon Brown, tendering his resignation as prime minister. The next duty for Gordon Brown is to go to Buckingham Palace, and-there are his sons, Gordon-John and Frasier, the Brown boys. You don't often see them on television. They tend, if they're caught in press photographs, they tend to have their faces pixilated, but there you go. The Brown family saying good bye to Downing Street. And now they'll be off to Buckingham Palace, where Gordon Brown will tender his resignation to the Queen.
Max Foster is still with us.
Max, there is a lot to discuss here. He said he was privileged to serve, he loved the job, he said he'd pay tribute to the armed forces, he'll never forget those who died in honor of the country.
He also, I mean, buried away at the end of his speech there, sparked a leadership battle in his own Labour Party, by tendering his resignation immediately, as leader of the Labour Party, Max.
FOSTER: Yes, you can only see that perhaps Harry Harmon will step in as an interim leader of the Labour Party, than as the new race for the leadership does take place.
The crucial thing here is that Gordon Brown has announced that he is resigning. He's on his way to the palace now. The Queen, one can only assume is being summoned. He'll go there, he'll make a resignation to you. And he will suggest to her that she invite David Cameron to be the new prime minister. One assumes that David Cameron will accept that invitation. We'll hear from him, I'm sure, momentarily.
Whatever happens from here, then, David Cameron and the Conservatives will lead the next government. They can either do so as a minority, but as we expect, he will have support from the Liberal Democrats. We haven't had that confirmed. Either way, the conservatives are leading the government, and Gordon Brown, as you can see, is leaving government. He's on his way to Buckingham Palace. This is a moment in contemporary U.K. history. Not since 1974 have we seen this sort of politics in the United Kingdom. Many thought it could go on all week. Thank fully it only went on for five days.
We don't yet have a new government confirmed from David Cameron. Talks are taking place just down the road, with the Liberal Democrats. Can we assume that there is going to be some sort of agreement between the two? I think we probably can. If there isn't, either way, I think you can expect in the coming hours, David Cameron will be coming in here, Adrian, as the new prime minister.
FINIGHAN: Absolutely, Max. We'll stay with this live coverage of these momentous events. I mean, terrifically exciting here in London at the moment, the atmosphere, the pace of evens surrounding the final outcome of Britain' inconclusive general election quickened over the last few hours. And you saw there, live, here on CNN-as he will soon be the former Prime Minister Gordon Brown, announcing that he intends to go to Buckingham Palace, he's on his way there right now, to tender his resignation to her Majesty the Queen.
Let's talk now with the diplomatic editor of the "Financial Times" James Blitz is with us.
This is also the end of an era, James, in that it marks the end of 13 years of Labour government in the U.K.
Well, James, I don't know if you can hear me.
JAMES BLITZ, DIPLOMATIC EDITOR, FINANCIAL TIMES: Yes, I can hear you.
FINIGHAN: Sorry, James-yes, sorry, we didn't catch what you were saying there at the beginning. Please, away you go again. Thirteen years of Labour coming to an end.
BLITZ: Yes, it is a very poignant moment. Gordon Brown, a few moments ago was standing on the steps of No. 10, where he was three years ago, when he first became prime minister, in exactly the same place. And it is a crushing moment for him. I think you could hear it in his voice. It was a very nervous voice. It was a very emotional moment. He came out with his two sons, which is something you very rarely see. He has kept his sons absolutely in the back ground of British politics. And as you can see now, he is on his way to see the Queen, in order to tender his resignation.
And I have no doubt that you will see, within the next half hour or hour, David Cameron going to Buckingham Palace, because under the terms of Britain's constitutional arrangement, we're not going to have a situation where we don't have a prime minister over night. And Mr. Cameron, I would expect to go to No. 10 Downing Street before the night is out.
FINIGHAN: And what do you make of that speech, James, in which he said he was privileged to serve. He loved the job. He said he paid tribute to Britain's armed forces. I mean it was very statesman like, wasn't it. That will have won him a lot of plaudits.
BLITZ: It was very statesman like. I was very struck by how he dwelled on the point about the armed forces. I think for Gordon Brown this premiership has been particularly difficult because he was seen at times not to have funded Britain's armed forces adequately because he was seen not to be in touch with what his generals were saying at certain points about the need for deployments in Helmand (ph). I think he was really there trying to get closure on all that, in the way he spoke about it. Saying that he will always have the families of the bereaved in his mind. It was a very stirring moment. And I think touching on something which was very difficult for him over the last couple of years.
FINIGHAN: And after that brief honeymoon period that he enjoyed when he first became prime minister, where did it all go wrong, do you think for Gordon Brown. It seemed that the press was never really on his side.
BLITZ: Well, it went wrong right from the start, because he dabbled with the idea of calling a general election, which in the end he didn't do. He was accused of having buckled out. He then managed to get some momentum going again. He performed very well in the first stages of the international financial crisis, with a significant bank recapitalization, (UNINTELLIGIBLE). In October 2008 he was really being seen internationally as a very significant and important player in the global crisis. He was an inspiration in the setting up of the G20 arrangement.
But there were so many problems that crowded in on him. The first, inevitably, was that the U.K. ended up, as a result of the crisis, with its worst financial arrangements for decades, with its most serious fiscal crisis. I think after that, you then had the problem that he was a figure who never really connected with the public in the way that Tony Blair did. He was seen as somebody who was seen as aloof, distant, and running a very controlled administration from inside Downing Street. And he never really broke out of that image. You saw it in the election campaign and I think that was one of the things that undermined him very badly. And it is one of the reasons why didn't quite pull through.
I think in the end one of the sad judgments for Labour and for Gordon Brown with the election is that if they had had another leader, they might have clinched it. The Conservatives didn't have the momentum to get an overall majority.
FINIGHAN: James, we have just seen live pictures of Gordon Brown arriving at Buckingham Palace, where he is now meeting with Her Majesty the Queen, getting a rare glimpse of this aerial shot of the inner courtyard at Buckingham Palace.
James, here we are writing Gordon Brown's political obituary here. What do you think is next for Gordon Brown? He said there are many, many things left that he still wants to do.
BLITZ: He's not really been clear about what he wants to do afterwards. I don't think Gordon Brown is a man who has ever really taken anything for himself. He's not a man who is interested in amassing a big fortune of any kind. In that sense he will be quite a contrast to Tony Blair, who has gone around the world bringing a lot of money through speech making and other private ventures. He's not going to do that at all. I think one possibility for him could be that he could go to be managing director of the IMF, if Dominique Strauss-Kahn were to move back into French politics. I'm sure there will be speculation about that. I think he is somebody who could do things in the charitable sector.
But he hasn't been clear about what he wants to do. I certainly think that after 20 to 25 years in the front line of British politics, I certainly don't think that he'll be staying in the House of Commons for very long.
FINIGHAN: James, one question about the markets, as to-I know you are the diplomatic editor-but writing for the "FT". How do you think that the markets will react now. The pound strengthened today when it looked like the negotiations were going firmly and swinging decisively in David Cameron's favor, earlier today. What do you think the reaction will be tomorrow?
BLITZ: I think that's going to be very positive. I think what you're seeing is the creation of a reasonably stable coalition between the Conservatives and the Liberal Democrats. I think it's going to last.
My personal view is it will last one, two, maybe three or four years. I -- I don't think it's going to have the problems that people are talking about.
Had Labour and the Liberal Democrats come together in what people were calling the coalition of the losers, I think there would have been a very severe negative reaction in markets and in the political world generally, because that simply wasn't a sustainable and stable option.
It's not going to be easy between David Cameron and Nick Clegg, the leader of the Liberal Democrats. They're really in totally uncharted territory for the United Kingdom. We've never seen an arrangement like this, well, certainly not since the late 1970s. And if the Liberal Democrats go into government, we won't have seen anything like this since the end of the Second World War in 1945, when Winston Churchill had Liberal ministers in his coalitions.
So it's going to be difficult, but I think the augers at the start are pretty good. I think they're certainly going to make a decent attempt to deal with the budget deficit. I certainly think it's a government that's going to last for a year. And, as I say, once they've done that, I think they'll then deal with the issue of election reform in the second year. (INAUDIBLE) makes it go on beyond that.
So I'm pretty optimistic about what we're actually seeing developing in this coalition, although others, I think, will disagree.
James, many thanks, indeed for -- for that analysis.
We really appreciate it.
James Blitz, the diplomatic editor of "The Financial Times".
Well, a short time ago, let's -- if you've just joined us, by the way, then, well, things are moving fast here in London. A short time ago, Gordon Brown came out of Downing Street after that inconclusive U.K. election and announced that he was -- his intention to go to Buckingham Palace and to tender his resignation to the queen.
As yet, we have no idea on what sort of government David Cameron will form with the -- the Liberal Democrats. Negotiations are still underway at the cabinet's office in White Hall. We're -- we're expecting some sort of announcement from there shortly.
And, of course, once David -- once Gordon Brown has -- has left Buckingham Palace, it will then be up to David Cameron to -- to go and meet the queen. As James was telling us a few moments ago, constitutionally, we're not allowed to have a prime minister or to be without a prime minister overnight.
Hot footing it behind Gordon Brown as he made his way to -- oh, hang on. Here we go. Breaking news, I think, from the cabinet office. These are the Liberal Democrat spokespeople here.
FINIGHAN: Well, it was obviously a very brief statement there from the Liberal Democrat negotiators. And we didn't catch it. We weren't there in time. But things are moving. The negotiations, after six hours or so, have -- have broken up. It remains to be seen yet what form of deal the -- the Conservatives, under David Cameron, will have been able to strike with the Liberal Democrats, who hold the balance of power.
Let's bring in CNN's Becky Anderson, who perhaps can -- can tell us more. She's at Westminster at the moment -- Becky, it's -- well, it's all exciting stuff, but still very much in the air. We still don't know what sort of deal will be struck, although we do know that David Cameron will be the next prime minister in -- well, within the next hour or so.
BECKY ANDERSON, CNN CORRESPONDENT: Well, that's right. So there are no knowns, to steal a phrase this hour, and there are known unknowns at this point.
So let's just remind our viewers what we do know.
Gordon Brown is, at present, resigning as prime minister. He is with the queen. That happened in the last few minutes or so, with his wife, Sarah, and his sons, John and Fraser. They left Ten Downing Street. He told the world's press of his intention to resign as prime minister. He cannot form a government. And by protocol, that means he must go to the queen and resign as prime minister and most likely -- I mean it would be very unusual if she didn't accept that resignation. She will be waiting, as you said, for David Cameron to follow Gordon Brown in and say that he is able to form a government. And we will move on from there.
What sort of government, though, is the known-unknown at this point. We don't know whether that government will be a coalition at this point. Most likely it will be, with the Liberal Democrats. You've just seen Daniel Alexander, the spokesman, coming out of negotiations. Those have been going on now today for about six hours. One assumes that at this point, they are pretty close to having decided how they will run government with the Conservatives going forward.
We will find out from David Cameron over the coming hours exactly what sort of shape one assumes that government will be.
They will sit, of course, behind me here in the houses of parliament. It will look very different from that which dissolved about four weeks ago. Of course, the election was on Thursday. It was inconclusive. We've had a hung parliament in the U.K. since then.
The markets, the international markets have been watching this story very, very closely, as you suggested, Adrian. The markets just going slightly higher. Certainly the UK's stock market is going slightly higher today, when it became obvious that we were, indeed, looking at...
FINIGHAN: Becky, I'm going to interrupt you...
FINIGHAN: I'm going to interrupt you, Becky, because...
ANDERSON: -- for the Conservative Party.
Let's listen to what he's saying.
FINIGHAN: Again, a very brief statement there from -- from William Hague (ph), so short that -- that we didn't catch it. Obviously, William Hague is going to leave any of the talking to -- to David Cameron, as and when he speaks to the media.
We'll -- we'll be back with Becky in just a moment.
But we just want to take you back to Buckingham Palace. Hot footing it behind Gordon Brown after he left Downing Street to -- to head to the palace, to tender his resignation to the queen, was -- was CNN's Paula Newton.
(BREAKING NEWS COVERAGE OF BRITISH ELECTION)