[Al Arabiya Latest] The Liberal Democrats agreed on Wednesday to rule with the larger Conservatives under new Prime Minister David Cameron in Britain's first coalition government since 1945.The agreement between the two parties, reached five days after an inconclusive election, ends 13 years of rule by the center-left Labor Party under Tony Blair and his successor Gordon Brown.
The untested partnership will have to clean up public finances, with a record budget deficit running at more than 11 percent of national output.
Markets welcomed the agreement, hopeful that a government led by the center-right Conservatives will take swift action to bring down spending.
"This is going to be hard and difficult work. A coalition will throw up all sorts of challenges. But I believe together we can provide that strong and stable government that our country needs," Cameron said in his first speech as prime minister.
The Liberal Democrats were also celebrating after decades spent in the shadow of Labor and the Conservatives.
"Hooray," former Liberal Democrat leader Paddy Ashdown said as he emerged from a late night meeting at which the party put its final seal of approval on the deal.