Speculation is mounting as to the outcome of talks held between Conservative leader David Cameron and Liberal Democrats leader Nick Clegg following last Thursday's election which left Britain with a hung parliament.

(From L to R) British Liberal Democrat Party Leader Nick Clegg and his wife, British Conservative Party Leader David Cameron and his wife, British Prime Minister Gordon Brown and his wife. [Xinhua]

The Conservative Party fell just short of the required number of 326 seats in order to seize power gaining only 306 seats in parliament. Despite what was seen by some as a clear mandate from the electorate, Gordon Brown remains in power as the Prime Minister and was referred to as the squatter of No. 10 by some of Britain's tabloids. 

Meanwhile, the Conservatives have been holding talks with the Liberal Democrats in order to broker a deal and form a coalition. Brown has offered the Lib Dems talks if no deal is reached with the Conservatives.

But according to those attending the talks between the Tories and the Lib Dems, discussions seemed to be going well. The Conservative Party's shadow foreign secretary William Hague, emerged from the Cabinet Office after a day of talks, and said, "The issues that we have covered have included political reform, economic issues and reduction of the deficit, banking reform, civil liberties, environmental issues. So, we've had good discussions about all of those areas. We are agreed that a central part of any agreement that we make will be economic stability and the reduction of the budget deficit, but each negotiating team is now going to report to our party leaders."

Hague was also joined by shadow chancellor George Osborne, policy chief Oliver Letwin and chief of staff Ed Llewellyn. On the Liberal Democrats team were MPs Chris Huhne, the Lib Dem home affairs spokesman Andrew Stunell, David Laws and chief of staff Danny Alexander.

In a brief statement Alexander described the talks as wide-ranging and "good", and also emphasized that a reduction of Britain's 163 billion (242 billion U.S. dollar) deficit was important.

As talks were set to continue this week Gordon Brown remains prime minister, and government business continues, with Chancellor Alistair Darling attending a meeting of finance ministers in Brussels.