By David Stringer Associated Press
LONDON — In a dramatic bid to keep the Labour party in power, British Prime Minister Gordon Brown said today he will resign by September but first hopes to broker a pact with the third-place Liberal Democrats as part of a coalition government.
Brown said his Labour Party, which came a distant second in Thursday’s national election, would begin a leadership contest to replace him as he focused on talks aimed at breaking Britain’s election deadlock.
“As leader of my party I must accept that as a judgment on me,” Brown said, referring to Labour’s poor showing in the election.
Brown’s comments came as the Conservatives, who won the most seats in the election but not a majority, already were holding talks with the Liberal Democrats. Some lawmakers said those talks had stalled over differences on key issues, including reform of the voting system.
In a statement outside Downing Street, Brown said Liberal Democrat leader Nick Clegg had asked to begin formal coalition talks with the Labour Party and the two could form a center-left alliance.
Clegg had previously said Brown’s departure would likely be a condition of any deal with Labour.
“There is a progressive majority in Britain and I believe it could be in the interests of the whole country to form a progressive coalition government,” Brown said.
Brown said he hoped a new Labour leader would be appointed at the party’s annual convention in September. Foreign Secretary David Miliband and Education Secretary Ed Balls are leading contenders to succeed Brown.
The pound fell nearly 1.5 cents against the dollar after Brown’s statement, trading at $1.4866 late today, reflecting some fear of Labour’s continued presence in the government.
Britain has a record 153 billion-pound ($236 billion) deficit that the Conservatives have pledged to tackle faster than Labour.
Earlier today, the Conservatives led by David Cameron and the Liberal Democrats both reported progress in talks to form a new government — amid fears that prolonged uncertainty would rattle markets and anger voters.
But the Labour Party also was making overtures to the Liberal Democrats, refusing to give up.
The key issue: electoral reform, which the Liberal Democrats demand but which the Conservatives fear would banish them to the political wilderness for years to come.
Cameron and Clegg met face-to-face today as teams of party negotiators tried to hammer out a power-sharing deal. Brown also met with Clegg today amid speculation that Cameron’s expected refusal to back sweeping electoral reform could thwart a Conservative-Liberal Democrat alliance.
It’s a critical juncture for Clegg. His position as kingmaker could determine his party’s influence not only in the next government but in elections for decades to come, but only if the Liberal Democrats can get their main wish: an overhaul of Britain’s electoral system.
Proportional representation is critical to Clegg because it would mean his party would gain a greater share of seats in House of Commons. On Thursday, his party earned 23 percent of the vote yet got only 9 percent of the body’s 650 seats.
As talks with the Conservatives continued behind closed doors, Clegg today urged voters to “bear with us a little longer.”
“All political parties, all political leaders are working flat out, round the clock, to try and act on the decision of the British people,” Clegg said. “(But it’s) better to get the decision right rather than rushing into something which won’t stand the test of time.”
Clegg has a tough sell to persuade his party to accept an alliance with Cameron that doesn’t include voting reform.
But the Conservatives strongly oppose the change, as it would likely mean fewer seats for Britain’s two main parties — the Conservatives and Labour. So far, Cameron has offered the Liberal Democrats only a review of the voting system and the prospect of a House of Commons vote on changing it — a vote that Clegg is unlikely to win.
Still, the experience of decades as Britain’s third-place party is likely to weigh heavily on the Liberal Democrat lawmakers as they meet with Clegg later Monday to discuss the possible alliance.
Like Clegg, Cameron also faces dissent in his ranks — caught between his circle of reformers and the Tory old guard, which blames him for failing to secure a majority in an election that months ago he was supposed to win.
William Hague, Cameron’s de facto deputy, said negotiators had made “further progress” in talks today with the Liberal Democrats.
“The negotiating teams are working really well together,” he said.
Hague said the Conservative negotiating team would report to Cameron and the party’s legislators later today.
Former Conservative Party prime minister John Major told BBC radio that a quick deal was necessary. “Everybody is looking at the compromises that may be necessary, but I don’t think this is a dance that can go on for too long,” Major said.
The Liberal Democrats and Conservatives said they’d found some agreement on action to reduce Britain’s record 153 billion-pound ($236 billion) deficit, and likely on reform of the education system.
However, Clegg and Cameron’s groups have wide differences over foreign policy, nuclear power and plans to replace Britain’s fleet of nuclear-missile armed submarines.
Britain’s inconclusive election on Thursday produced a hung Parliament in which no party holds a majority of seats. The only other two-party pact in Britain since World War II came in 1977, when a weakened Labour government struck an informal deal with the then-Liberal Party lasting less than a year.
Cameron’s center-right Conservatives won 306 of the 650 seats in the House of Commons, 20 short of a majority. Brown’s center-left Labour won 258 and the center-left Liberal Democrats took 57 seats.
Labour Party lawmaker Alistair Darling, Britain’s Treasury chief, said his party would be prepared to offer Clegg a deal on voting reform if the Liberal Democrats’ talks with the Conservatives break down.
“I hope that by the end of today they will decide whether they can do a deal or not,” Darling said. “We have made it clear that if they can’t, then — of course — we are ready to listen to the Liberals.”
Brown’s Labour party could seek to form an alliance or a coalition with Clegg’s party, the Scottish Nationalist Party, the Green Party’s single lawmaker and other minor parties.
Despite worries that days of political horse-trading would rattle the financial markets, Britain’s FTSE 100 index soared 248.72 points, or about 4.5 percent, to 5,371.74 in early trading. World stock markets surged on news of the European Union agreement on a package worth almost $1 trillion for the embattled euro.
But Howard Archer, chief U.K. and European economist at IHS Global Insight, warned political progress was necessary.
“It is of paramount importance that a credible commitment on how to tackle the dire UK public finances is in place sooner rather than later,” Archer said.