UK opposition not clear on deficit cuts

The Conservatives are tipped to win power for the first time since 1997 with an election due by June but some polls point to a hung parliament, a nightmare scenario for markets eager to see swift action to cut record government borrowing.

Darling's ruling Labour party has said it will halve the budget deficit - forecast to reach almost 13 percent of gross domestic product this year - over four years.

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But that pace is regarded as too slow by the Conservatives who say Britain's top grade credit rating is at risk and plan an emergency budget if they win power this year.

“If you decide to halve the deficit over a three-year period, that would add another 26 billion pounds or so to the amount you have to take out of the economy - I don't think it would be sensible to do that at the moment,” Darling said.

He added, however, that he would do more to reduce the deficit if the recovery turns out to be stronger than expected.

Speaking at Labour party headquarters in London, Darling said there was a 34 billion pound ($54.74 billion) black hole in Conservatives spending and taxation plans.

Outside, Conservative activists wearing masks of Labour Prime Minister Gordon Brown handed out leaflets warning of huge cuts in government spending if Labour were to remain in power.

Late election likely

Whoever wins the election will face the difficult balancing act of getting government borrowing back on a sustainable path while engineering a solid recovery following the longest recession on record.

Both parties have kicked off pre-election campaigns in the last few days in what is likely to be a long battle for votes. Analysts expect Brown to give his party as long as possible to reverse its poor poll ratings.

“I think it's probably going to come later, but I don't know the answer to that,” schools minister and close Brown ally Ed Balls told BBC television in response to a question about the timing of the election.

Balls said he expected Labour to deliver a budget before the election. A pre-election budget would give Labour a final opportunity to silence calls for clarity over its own deficit reduction plan and woo swing voters.

The Conservatives have said that cutting borrowing quickly will keep interest rates low - indicating that the Bank of England may need to keep monetary policy looser for longer to boost growth while the deficit is slashed.

Both parties have also made overtures to the Liberal Democrats - the third biggest party in British politics which could prove pivotal to the balance of power in the event of a hung parliament.