I'm trying to pin down the possible ways the outcome could go.
Let's assume that the current polling average, from uk polling report, of C: 34, LD: 29 and L: 28 stays true on May 6th.
The seat results would leave us with, on a universal swing:
1) Conservatives 265 Labour 260 Liberal Democrats 94 ----> Hung parliament
Now it is quite an assumption that they will; we still have the final and most crucial debate, last minute surprises, local campaigning effects, ashcroft money in marginals, the unpredictability of where the new lib dem support lies and 10 days left of campaigning, all of which could change the vote percentages and seat percentages. So let's put in some other likely permutations. The most probable one after the one i just used, is that labour get the most seats, despite coming third. This could happen on even just a C:33, LD:29, L:28 result, as well as a C:34, LD:29, L: 29, and even a C:33, LD:30, L:27.
The seat results from the first of those would leave us with, on a universal swing:
2) Conservatives 247 Labour 276 Liberal Democrats 96 -----> Hung parliament
The other plausible option is an actual full Tory majority, but this would require a serious change in the current polling, with the conservatives moving onto at least 36 points and for the lib dems to drop significantly. It could happen but this is highly highly unlikely unless something massive happens in the next 10 days, so i won't bother factoring it into my analysis of how it could go down.
Now option number one, with the Tories as the biggest party.
a)
Lib-Con alliance - If they have the most votes and the most seats Clegg argues they have a mandate, and that he would go with them first. However, Lib Dem party rules mean that 75% of the party must support any coalition decision which could cause difficulty, and the Tory party is unlikely to be that happy allying with the Lib Dems especially given their EU position. The other factor is electoral reform, which is central to any partnership, and developments today shed more light on that.
The Lib Dem leader told a news conference electoral reform was "an absolute precondition for renewal in this country". An hour later, at a Conservative press conference, Cameron said that he was not in favour of electoral reform. But he refused to give a categorical commitment to maintaining the current first-past-the-post system.
http://www.guardian.co.uk/politics/blog/2010/apr/26/general-election-2010-live-blog
So a Lib-Con partnership could take place if they were willing to offer PR, which in game theory terms might be a good idea as i argued a few pages back, but would anger party loyalists a great deal and the ideological differences would make a coalition difficult to sustain.
b)
Lib-Lab alliance - As Clegg made clear on the Marr show, he would only ally with Labour with this position if they got rid of Brown and made him Prime Minister, as well as offering electoral reform. Given the shrewd tactical positioning of Mandelson, this isn't as impossible as it sounds initially. Clegg is much more popular than Brown and an alliance between the parties wouldn't have too great an ideological difference. Labour love nothing more than staying in power and the conservatives may refuse to agree to the LD's demands. However, the chances of labour mp's accepting such dominance by a smaller party might not be that high, as it may destroy the party long term.
c)
No coalition, queen asks Tories to run a minority government. Would probably lead to an election next year, and chaos.
Now option number two, with Labour as the biggest party.
a)
Lib-Lab alliance - Clegg has deliberately refused to comment on what would happen if Labour lost the popular vote but won the most seats. This gives it room for this to happen, as Labour can easily give in to a bunch of the LD's demands, and the really insane ones like Clegg as PM don't come into play. The other side is that it would be politically disastrous for Clegg to be seen as propping up the massively unpopular Gordon Brown, having campaigned on being an agent of change and different to the other two.
b)
Lib-Con alliance - Having no chance of forming a minority government might make them more interested in giving over to the LD's demands, especially given that it would mean another term out of power. However the idelogical differences remain, as well as the tories hesistancy over electoral reform.
c)
No coalition. Labour minority government, queen asks Labour to run maybe most unpopular government ever despite coming third. I would hope for protests in the street.
Please correct me if i have things wrong, especially on how a minority government would operate as there my knowledge is very shaky.