THE relative strength of the UK economy - the factor that decided last week's British election - should ease Prime Minister David Cameron's task of winning concessions from the rest of Europe ahead of an expected referendum on EU membership.

However, the disastrous showing of Mr Cameron's erstwhile coalition partners, the Liberal Democrats, and the Scottish Nationalists' near-wiping out the opposition Labour party in Scotland, will complicate manoeuvring over Europe.

The double-edged nature of the poll outcome demonstrates how British politics remains finely balanced. Yet, in view of the much clearer than expected result, uncertainty over Britain's future path has diminished. Sterling and UK financial markets are likely to benefit. This will not help in reducing Britain's giant twin international and domestic deficits, on the balance of payments current account and in the public sector budget, each of more than 5 per cent of GDP.