LONDON (MNI) – Speculation is mounting in political circles that a
deal between the Liberal Democrats and Conservatives could be announced
as early as Monday evening.

Soundings among party representatives and political reporters show
many speculating a deal could be outlined Monday, with 1830 GMT one
rumoured time.

With negotiations ongoing, it is not possible to verify these
reports.

Nevertheless, the widespread speculation is the Liberal Democrats
will not go into a full-blown coalition with the Conservatives but will
instead settle on a deal to support a minority Conservative government –
the so-called ‘supply and confidence’ agreement.

The agreement would pave the way for an emergency June budget from
a Conservative administration, which should provide some market
reassurance over fiscal tightening.

Liberal Democrat and Conservative negotiators have both said
publicly they have made progress in talks Monday.

One deal on the table is that electoral reform, the holy grail of
the Liberal Democrat party, would be adopted for the upper chamber – the
House of Lords.

The Lords, which is currently not directly elected and contains a
mish mash of hereditary and non-heriditary members, could be transformed
into an elected chamber based on a proportional representation system.

Other zones of potential agreement between the Liberal Democrat and
Conservative Party would be cutting the number of members of parliament,
establishing a committee to look into voting reform and sidelining their
sharp differences over the EU by noting both are committed to
referenda on major EU decisions.

On the economic front, the two parties would like signal agreement
on the need to tackle the budget deficit. They could also agree on the
desirability of raising the starting level of income tax.

Another rumour doing the rounds is the establishment of cross party
Economic Stability Council, which would be headed by the popular
Liberal Democrat Treasury spokesman Vince Cable.

Many Liberal Democrats are opposed to a full coalition. The
provision of conditional support could be a way around the problem.

–London newsroom: 4420 7862 7491 email:drobinson@marketnews.com

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