British election deals May a crushing blow, blurring Brexit talks

British voters dealt Prime Minister Theresa May a devastating blow in a snap election she had called to strengthen her hand in Brexit talks, wiping out her parliamentary majority and throwing the country into political turmoil.

With no clear winner emerging from Thursday's election, a wounded May signalled she would fight on. Her Labour rival Jeremy Corbyn, once written off by his opponents as a no-hoper, said she should step down.

In the aftermath of one of the most sensational nights in British electoral history, politicians and commentators called her decision to hold the election a colossal mistake and derided her performance on the campaign trail.

The BBC reported, however, that May did not plan to resign.

"Theresa May has no intention of announcing her resignation later today," BBC political editor Laura Kuenssberg told BBC radio, adding, however: "It's not clear to me whether they're trying to kill the rumours off before she truly makes her mind up."

With 647 of 650 seats declared, the Conservatives had won 316 seats. Though the biggest single winner, they failed to reach the 326-mark they would need to command a parliamentary majority. Labour had won 261 seats.

With complex talks on Britain's departure from the European Union due to start in 10 days' time, it was unclear who would form the next government and what the fundamental direction of Brexit would be.

"If ... the Conservative Party has won the most seats and probably the most votes then it will be incumbent on us to ensure that we have that period of stability and that is exactly what we will do," a grim-faced May said after winning her own parliamentary seat of Maidenhead, near London.

After winning his own seat in north London, Corbyn said May's attempt to win a bigger mandate had backfired.

"The mandate she's got is lost Conservative seats, lost votes, lost support and lost confidence," he said.

"I would have thought that's enough to go, actually, and make way for a government that will be truly representative of all of the people of this country."

Labour finance spokesman John McDonnell told BBC radio: "We'll put ourselves forward to serve the country and form a minority government and the reason for that is I don't think the Conservative Party is stable, I don't think the prime minister is stable ... I think she is a lame duck prime minister."

McDonnell also said Labour would not do a coalition deal with any other party.

Sky News said the Conservatives were in talks with Northern Ireland's Democratic Unionist Party (DUP), a natural ally, which won 10 seats.

But Labour had potential allies too, not least the Scottish National Party (SNP) who suffered major setbacks but still won a majority of Scottish seats.

From the EU's perspective, the upset meant a possible delay in the start of Brexit talks and an increased risk that negotiations would fail.

"We need a government that can act," EU Budget Commissioner Guenther Oettinger told German broadcaster Deutschlandfunk. "With a weak negotiating partner, there's a danger that the negotiations will turn out badly for both sides."

Conservative member of parliament Anna Soubry was the first in the party to disavow May in public, calling on the prime minister to "consider her position".

"I'm afraid we ran a pretty dreadful campaign," Soubry said.

May had unexpectedly called the snap election seven weeks ago, even though no vote was due until 2020. At that point, polls predicted she would massively increase the slim majority she had inherited from predecessor David Cameron.

"Whatever happens, Theresa May is toast," said Nigel Farage, former leader of the anti-EU party UKIP.

"WORST OUTCOME"

Sterling fell by more than two cents against the US dollar, hitting an eight-week low of $1.2636, but by 0728 GMT it had recovered to $1.2710.

"A hung parliament is the worst outcome from a markets perspective as it creates another layer of uncertainty ahead of the Brexit negotiations and chips away at what is already a short timeline to secure a deal for Britain," said Craig Erlam, an analyst with brokerage Oanda in London.

May had spent the campaign denouncing Corbyn as the weak leader of a spendthrift party that would crash Britain's economy and flounder in Brexit talks, while she would provide "strong and stable leadership" to clinch a good deal for Britain.

But her campaign unravelled after a policy u-turn on care for the elderly, while Corbyn's old-school socialist platform and more impassioned campaigning style won wider support than anyone had foreseen.

In the late stages of the campaign, Britain was hit by two Islamist militant attacks that killed 30 people in Manchester and London, temporarily shifting the focus onto security issues.

That did not help May, who in her previous role as interior minister for six years had overseen cuts in the number of police officers. She sought to deflect pressure onto Corbyn, arguing he had a weak record on security matters.

On a nerve-racking night for the Conservatives, interior minister Amber Rudd held on to her seat by a whisker, while several junior ministers were swept away.

With the smaller parties more closely aligned with Labour than with the Conservatives, the prospect of Corbyn becoming prime minister no longer seems fanciful.

That would make the course of Brexit even harder to predict. During his three decades on Labour's leftist fringe, Corbyn consistently opposed European integration and denounced the EU as a corporate, capitalist body.

As party leader, Corbyn unenthusiastically campaigned for Britain to remain in the bloc, but has said Labour would deliver Brexit if in power, albeit with very different priorities from those stated by May.

"What tonight is about is the rejection of Theresa May's version of extreme Brexit," said Keir Starmer, Labour's policy chief on Brexit, saying his party wanted to retain the benefits of the European single market and customs union.

In domestic policy, Labour proposes raising taxes for the richest 5 per cent of Britons, scrapping university tuition fees, investing 250 billion pounds ($315 billion) in infrastructure plans and re-nationalising the railways and postal service.

Analysis suggested Labour had benefited from a strong turnout among young voters.

The campaign had played out differently in Scotland, the main faultline being the SNP's drive for a second referendum on independence from Britain, having lost a previous plebiscite in 2014.

SNP leader and First Minister Nicola Sturgeon said it had been a disappointing night for her party, which lost seats to the Conservatives, Labour and the Liberal Democrats.

Scottish Conservative leader Ruth Davidson said Sturgeon should take the prospect of a new independence referendum off the table.