The results are in!

As many commentators have pointed out, the election result is about as bad as it could be from a market sentiment point of view – strong government of any colour being vastly more to international investors’ tastes than the uncertainty and vacillation of a hung parliament.

So what’s going to happen? Well, Cameron is sure to have a go at forming a government of some kind, whether in coalition or as a majority. He has already said as much, vowing to govern as best he can ‘in the national interest’. He is thus set to be the next PM one way or another.

But his only chance of majority rule – and of getting to occupy Downing Street for anything like the full five-year term – is to forge an alliance with the LibDems. A pretty tall order – a poll this morning by Conservative Home estimates that 94% of Tory grass roots supporters want nothing to do with Clegg. In his favour, Cameron can probably count on Clegg’s support – despite having said the opposite only a few days ago. Nick’s only way to salvage anything from the dismal LibDem performance is to hook up with Cameron in return for a promised referendum on electoral reform. But he won’t find it easy to persuade his party to swallow such a deal either.

The alternative is a minority Tory caretaker government and another election, probably next year. Hardly a glorious prospect, given the urgency of action required to tackle our debts and get economic growth back on the menu.