Britain in Final Hours of Tight Election Campaign

Britain's political leaders entered the final hours of campaigning Wednesday in the most unpredictable election in living memory which could yield no clear winner and weeks of haggling over the next government.

A win for Prime Minister David Cameron's Conservatives on Thursday would raise the risk of Britain exiting the European Union because he has promised a referendum on leaving the EU by 2017.

But some business leaders and investors have warned that the main opposition Labor party, led by Ed Miliband, could be bad for the economy, which is weighed down by a budget deficit of nearly £90 billion (120 billion euros, $140 billion).

With neither expected to win outright and smaller parties on the rise, the election is also likely to underline the decline of traditional two-party politics in Britain and rise of a more multi-lateral European style.

"This has been a remarkable election," Professor Tony Travers of the London School of Economics said, predicting that it would lead to some form of multi-party government "probably less stable than the one that formed in 2010."

The Conservatives have been in power in a coalition government with the centrist Liberal Democrats since 2010. 

But it is thought that a minority government supported on an informal basis by a smaller party or parties is more likely than a formal coalition, under which the Liberal Democrats have seen their support plummet in the last five years.

- Messy negotiations -

Cameron and Miliband, whose parties are virtually tied in opinion polls, were approaching the end of exhaustive tours of the country in a last-minute bid to attract undecided voters.

Both insist they are still fighting for a clear majority in the 650-seat House of Commons which would let them govern alone but attention is increasingly turning to the alliances they could make with smaller parties.

Cameron seemed to acknowledge the possibility of a fresh coalition or minority government in an interview with BBC radio.

"People know with me that in 2010, we didn't win a majority, I put the country first, I formed the first coalition government for 70 years because I wanted to provide strong and stable government for Britain," he said. 

"I will always put the country first and do what I can do to provide a strong and stable government."

His Conservatives look well placed to team up again with Clegg's Liberal Democrats, assuming the Liberal Democrat leader can hold on to his own seat in Sheffield, northern England.

While Miliband has ruled out a formal deal with the pro-independence Scottish National Party (SNP), it is thought they could still prop up a minority Labor government on a vote by vote basis.

He told the BBC he was "not countenancing defeat" in the election. "I'm optimistic but it will be in the hands of the people come tomorrow," he added.

The Liberal Democrats have left open the possibility of backing either the Conservatives or Labor while the SNP will block the Conservatives, and the anti-EU UK Independence Party is unlikely to win more than a handful of seats.

Only one thing is certain -- the SNP is likely to make major gains and take most of the seats in Scotland at Labor’s expense, transforming Britain's political scene and potentially bringing the prospect of Scottish independence closer.

Negotiations to form a government are likely to be complicated. The first big test for the new government will come when parliament votes on its legislative program following the Queen's Speech on May 27 in a de facto confidence motion.

- Results due Friday -

Polls open at 0600 GMT and close at 2100 GMT on Thursday. Exit polls are published immediately after that followed by the first results shortly afterwards and final results Friday afternoon.

Britons will cast their ballots in around 50,000 polling stations around the country, including in unusual places like pubs, caravans and garages.

The first ballot boxes were already being delivered to remote parts of Britain, including Rathlin Island off the northeast coast of Northern Ireland.

The latest BBC poll of polls average puts the Conservatives at 34 percent, followed by Labor at 33 percent, UKIP at 13 percent and the Liberal Democrats at just 8 percent.

But the percentage breakdown is a poor indicator of the final election outcome in Britain because of the first-past-the-post system, which counts the results only in individual constituencies, not the overall vote share.