Deficit blues

10 May 2010 By Chris Hughes

The UK’s third party has dropped its insistence that deficitcutting should wait until next year. This will make it easier for the Conservatives, who want to wield the axe this year, to run a responsible economic policy whether in coalition with the LibDems or on their own.

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Gordon Brown is to stand down as leader of the UK Labour Party after coming second in last week's general election.

The UK prime minister said Labour was in formal talks with the Liberal Democrat party to form a possible coalition government.

Before Brown's announcement, David Laws, the Liberal Democrat spokesman for children, schools and families, said his party had agreed that the UK deficit should be cut as soon as possible", following talks with the Conservative party to form a government in the wake of last weeks' inconclusive UK general election.

The pound earlier rallied 1.3 percent to $1.5001 after touching a yearlow of $1.4475 on Friday. It later settled to around 1.4874 after news of Brown's plan to stand aside.

The parliamentary party has also agreed that deficit reduction and a plan to bring down the deficit as soon as possible must be at the heart of any agreement, Laws said.

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