In a deal that very few saw coming the Conservative and Liberal Democrat parties have forged a coalition deal. This gives them a 77 seat commons majority.

Both sides have had to throw a lot of trust as well as a lot of concessions into the mix, but it is a mix that might just work. Cameron, who is now Britain’s 53rd PM, has pledged a strong stable government and backed it up by making Nick Clegg the Deputy Prime Minister and given the LibDems five cabinet jobs and 15 ministerial posts.

Both sides have also committed to a full five year term and declared a date for your diary, the next general election will be on Thursday the 7th May. This effectively removes the PM’s right to call the election when circumstances most suit his own and his party’s agenda maybe to the detriment of the country.

Now the two party leaders face the challenge of the UK’s awful economic position and the Tory’s preferred plan to start tackling the deficit this year looks like it will be set in train. But in return are concessions to the LibDems over the alternative vote and raising the lowest tax band considerably.

While this is going on senior Labour figures, now all but forgotten, are quietly manoeuvring to be the one to re-invent their party. The LibDems accused Ed Balls and Ed Miliband of being more interested in scoring point off each other than taking inter-party talks seriously. David Miliband, another contender, has it seems tried to distance himself from the coalition talks. Others whose hats may enter the ring are Jon Cruddas and Andy Burnham.

But the dark clouds of the EU’s warning to the UK not to ask for its help if it gets into economic trouble is rumbling in the wings.

As the UK has not signed up to the £378 billion pound EU support fund, it has been told to expect no help. There are many Brussels, Swedish and French officials who believe that it is only a matter of time before sterling comes under the same sort of attack as the Euro recently did. It is felt that the political outcome of the general election and the coalition deal will end with the UK being unable to deal with its debt mountain. The Swedish are looking to support the fund even though they rejected the Euro.

According to the Telegraph, the chairman of the French equivalent of the UK Financial Services Authority, Jean-Pierre Jouyet who is also a former Europe Minister said: "There is not a two speed Europe but a three speed Europe. You have Europe of the euro, Europe of the countries that understand the euro … and you have the English, … The English are very certainly going to be targeted given the political difficulties they have. Help yourself and heaven will help you. If you don't want to show solidarity to the Euro zone, then let's see what happens to the United Kingdom."

Comment Here!