The conundrum which could follow the UK vote

Even after the results of the U.K. election are announced on Friday morning, this difficult-to-call election could leave us hanging, with some now expecting a weeks-long process to appoint a new government.

Polls suggest that neither the Conservative or Labour party will be able to form a majority government – the usual outcome – which could result in fraught negotiations in an effort to establish alliances.

What next?

The first meeting of the new parliament is due on May 18, and its first big order of business is the Queen's Speech on May 27, which is voted on by the House of Commons.

The U.K. has no formal written constitution, so experts and politicians have been scrabbling through the history books to find out what may happen in the event of a hung Parliament.

After all, no-one wants to embarrass the Queen by having her speech – which is written by the incumbent government, and sets out its agenda for the coming session - voted down.

So either the Conservative or Labour Party needs to make sure that they have the backing of enough members of parliament (MPs) to get their policies through.

First past the post

The party with the highest number of votes or seats does not get the first shot at negotiations or forming a government, unlike in some other countries.

David Cameron will still be Prime Minister until he resigns – and he will doubtless start negotiating with the smaller parties, probably starting with current partners the Liberal Democrats.

Yet, unless there is a sudden surge in support for either party, he is also likely to need support from a third party to get to the 323 MPs needed to pass laws.

The Houses of Parliament in London
Chris Ratcliffe | Bloomberg | Getty Images

This could prove more difficult. Northern Ireland's Democratic Unionist Party (DUP) could potentially provide the necessary seats, but their antiquated stance on social issues might not sit well with the LibDems – and nor would an arrangement with the U.K. Independence Party (UKIP).

Meanwhile, Ed Miliband, the Labour Party leader, will likely be talking to the Scottish National Party (SNP) to see whether it can provide enough MPs to back his policies.

If Cameron concedes that he can't get enough MPs together, Miliband will have to be ready to prove he can get new laws through.


So what can Cameron's Conservative Party do while their future is uncertain?

It can represent the country at major international meetings, like the Eurogroup of euro zone finance ministers on Monday, and it can continue to run its departments as caretakers, like their LibDem counterparts.

However, major long-term policy decisions or commitments will have to be put on the backburner. It's this gridlock – and the distant threat of a second election - which could worry markets.

- By CNBC's Catherine Boyle