Well, the outcome of the UK general election is finally known and (however hard I personallyfind to write this) the Labour party are out! We now have a Conservative prime minister,David Cameron, who has formed a Government in coalition with the Liberal Democrats, the3

largest party. The story of how this happened has many twists and turns. As some of youmay be interested in the narrative, I will briefly describe it before handing to Max Lawson,who sets out a political analysis.I cannot emphasise enough how unusual the last few days have been in UK politics. We areused to knowing who has won power during the night of the election day, which was lastThursday. The result, however, was that no party had achieved sufficient seats in theParliament to allow it to govern without an alliance with another party. In our ‘first past thepost’ rather than ‘proportional representation’ system, this is extremely rare.The Conservatives got 306 seats, Labour: 258, Lib Dems: 57 and Others: 28. The Lib Demswere therefore the kingmaker and urgent talks started over the weekend between them andthe Conservatives (the party that had achieved the most seats) with a sticking point beingchanges to the electoral system (that the Conservatives opposed).On Monday evening Labour played a powerful card when Gordon Brown announced hewould not remain as Prime Minister, even if a Labour/Lib Dem deal was agreed. This hadbeen a major block for the Lib Dems and his announcement led to intense talks startingbetween Labour and the Lib Dems to create a progressive coalition including some of thesmaller parties. Since Labour and the Lib Dems have more in common than the Lib Demshave with the Conservatives, it seemed like this would be the more natural alliance, and for afew hours it seemed as if momentum was carrying events in this direction.The Conservatives, who had not wanted to concede on changes to the electoral system,then announced they would agree to a referendum on voting reform. Labour/Lib Dem talksburned out after a few hours on Tuesday morning and the Conservatives and the Lib Demsintensified their dialogue throughout the afternoon and came to an agreement. In the earlyevening, yesterday, Gordon Brown resigned as Prime Minister with David Cameronsucceeding him and Nick Clegg, the Leader of Liberal Democrats, becoming deputy PrimeMinister.Here is a political analysis on the Robin Hood Tax - initial reactions to the UK election andEuro crisis - that Max has just written (as well, below that, his analysis of the impact of theGreek euro crisis and the return of the FTT):

The impact of the UK election and the new Conservative Liberal coalition

The new UK government is a coalition of the Conservatives and the Liberal Democrats. TheConservative government favours the Financial Stability Contribution (FSC) or bank levy.They have not commented on the Financial Activities Tax (FAT) and oppose the FTT. TheLiberal Democrats favour a temporary FAT tax for general revenue and commit to pursuingan FTT with the agreement of the US, France, Switzerland and Germany to financedevelopment. Both the Conservatives and Lib Dems are committed to pressing ahead with abank tax without waiting for global agreement. The Tories have said they will unilaterally doone that would raise 1 billion pounds annually, whereas the Liberal Democrats have saidtheir profits tax would raise 2-3 billion pounds annually until the Banks are broken up.The press arereporting that the new coalition Government will definitely press ahead with a bank levy as part of a series of reforms of banking, and Vince Cable, the Liberal Democrattreasury spokesperson is to be placed in charge of banks. This is potentially good news for the campaign and certainly better than a Conservative majority government. It makes aunilateral tax almost certain, and likely to be more ambitious than it would have been with a