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UK Conservatives need deal to stay in power as Brexit gamble fails

The U.K.'s Conservatives lost their parliamentary majority in sensational upset elections June 8, potentially leaving them scrambling for support from a small regional party to remain in power at a time when negotiations on the country’s departure from the European Union are about to commence.

The result meant Prime Minister Theresa May's snap election gamble to ask voters for a mandate to tackle Brexit backfired in spectacular fashion, and the pound plummeted almost 2% against the dollar to $1.2719 as investors fretted about how the U.K. would handle talks with Brussels.

As of 5:15 a.m. ET, the Conservatives had 318 seats, with just 1 left to declare in the 650-seat parliament. While a simple majority requires 326, Irish nationalists refuse to take their seats so this total would be enough for the Conservatives to hang on in government if they clinch the support of Northern Ireland's Democratic Unionist Party, or DUP, which had 10 seats.

Senior Conservative politicians said the prime minister should consider resigning, although sources told Sky News she would stay in the job. The European Union's budget commissioner, Guenther Oettinger, told German radio he was unsure if Brexit negotiations could begin on time.

The Labour Party, led by left-winger Jeremy Corbyn, had added 31 seats to 261, in a result which made a nonsense of pundits' predictions after a campaign in which he appealed to young people with promises to re-nationalize major infrastructure and boost taxes on corporations and high earners. Polls on the eve of the elections had predicted a Conservative lead of between 13 and 1 percentage points.

The DUP is keen to avoid the establishment of a hard border between Northern Ireland and the Republic of Ireland. But a lack of a Conservative majority could also make it easier for hard-line pro-Brexit party members to oppose concessions to the EU.