LONDON (Reuters) - An exit poll published after voting closed in the British election on Thursday suggested the opposition Conservatives would emerge as the largest party, but fall short of an outright majority in parliament.
The exit poll, conducted at 130 polling stations and which surveyed more than 20,000 voters, suggested Britain was on course for its first “hung parliament” since 1974.
This is likely to keep financial markets under pressure over concerns about protracted talks about who should lead the government.
The poll suggested the center-right Conservatives were likely to win 307 seats and Labour 255 seats in the lower House of Commons, both short of the 326 needed for a majority.
Exit polls from the last three elections correctly predicted the outcome, but they have not always been accurate. Exit polls in 1992 pointed to a hung parliament but the Conservatives in fact won a majority.
The next government will have to deal with a record budget deficit running in excess of 11 percent of national output, and demands for political reform following a parliamentary expenses scandal last year which left Britons disgusted with lawmakers.
Markets were hoping for a clear-cut result and fear that a stalemate could lead to political paralysis, hampering efforts to tackle the nation’s spiraling debt and secure recovery from the worst recession since World War Two.
A series of three U.S.-style leaders’ television debates, a first for UK politics, had energized campaigning and boosted voter turnout.
Opposition Conservative leader David Cameron saw a commanding poll lead dwindle since the turn of the year, with voters seemingly hesitant about embracing the change his party said they offered after 13 years of Labour rule.
Prime Minister Gordon Brown, who took over mid-term from Tony Blair in 2007, enjoyed a brief honeymoon in the polls but the effects of a grinding recession and an increasingly bloody war in Afghanistan sapped support for him and his Labour party.
The election equation had been complicated by an apparent surge in support for the Lib Dems, energized by strong performances in the TV debates by leader Nick Clegg, who shares Cameron’s relative youth — they are both 43 — and easy manner.
However, the exit polls show the Lib Dems falling short of the 63 seats they currently have in parliament.
Sterling had suffered its biggest one-day drop since last October on Thursday as markets awaited the outcome of the election and fretted over an inconclusive result.
It rose against the dollar as the poll pointed to the Conservatives emerging as the largest party.
The Conservatives have promised to cut the deficit harder and faster than Labour and to squeeze out 6 billion pounds ($9 billion) in efficiency savings in the current year.
Labour has warned voters that this could cost jobs and jeopardize the recovery but independent commentators say the figures are tiny compared with a forecast deficit this year of 163 billion pounds ($252 billion).
Independent think-tanks have accused all the parties of failing to be open with voters about the scale of cuts that will be needed to restore public finances.
Clegg has said he would find it hard to do a deal with Brown if Labour does finish third, but has not ruled out working with an alternative Labour leader, or with the Conservatives.
The Lib Dems share Labour’s concern that spending cuts should not be imposed until economic recovery is established and Labour are more open to electoral reform than the Conservatives.