Prime Minister Theresa May said on Friday she would form a new government with assistance from Northern Irish unionists to provide political certainty and lead Britain in talks with the European Union to secure a successful Brexit deal.
May asked Britain's Queen Elizabeth for permission to form a new government on Friday after an election debacle that saw her Conservative Party lose its parliamentary majority days before talks on Britain's EU departure are due to begin.
On the doorstep of her official Downing Street residence, May said she could rely in parliament on the support of her "friends" in Northern Ireland's Democratic Unionist Party after her governing Conservatives failed to win a majority.
"We will continue to work with our friends and allies in the Democratic Unionist Party in particular," she said.
"Our two parties have enjoyed a strong relationship over many years and this gives me the confidence to believe that we will be able to work together in the interests of the whole United Kingdom."
The DUP—which staunchly defends Northern Ireland remaining part of the United Kingdom, and takes a conservative approach to social issues—increased its number of seats to 10 in Thursday's election.
"We will fulfil the promise of Brexit together and over the next five years build a country in which no one, and no community, is left behind," May said.
"This will allow us to come together as a country and channel our energies towards a successful Brexit deal that works for everyone in this country, securing a new partnership with the EU which guarantees our long term prosperity."
The DUP said earlier on Friday it would not comment on reports that it had agreed to back May's ruling Conservatives.
Some political analysts doubt a Conservative minority government with support from the DUP would last over the long term, and think a second election is likely.
From the EU's perspective, the upset meant a possible delay in the start of Brexit talks and an increased risk that negotiations would fail.
"We need a government that can act," EU Budget Commissioner Guenther Oettinger told German broadcaster Deutschlandfunk. "With a weak negotiating partner, there's a danger that the negotiations will turn out badly for both sides."
The EU's chief negotiator said the bloc's stance on Brexit and the timetable for the talks were clear, but the divorce negotiations should only start when Britain is ready.
"Let's put our minds together on striking a deal," Michel Barnier said.
Sterling tumbled as much as 2.5% on the result while the FTSE share index opened higher. The pound hit an eight-week low against the dollar and its lowest levels in seven months versus the euro.
"A working government is needed as soon as possible to avoid a further drop in the pound." said ING currency strategist Viraj Patel in London.
Craig Erlam, an analyst with brokerage Oanda in London, said a hung parliament was the worst outcome from a markets perspective.
"It creates another layer of uncertainty ahead of the Brexit negotiations and chips away at what is already a short timeline to secure a deal for Britain," he said.
Conservative member of parliament Anna Soubry was the first in the party to disavow May in public, calling on the prime minister to "consider her position".
"I'm afraid we ran a pretty dreadful campaign," Soubry said.
May had unexpectedly called the snap election seven weeks ago, even though no vote was due until 2020. At that point, polls predicted she would massively increase the slim majority she had inherited from predecessor David Cameron.
May had spent the campaign denouncing Corbyn as the weak leader of a spendthrift party that would crash Britain's economy and flounder in Brexit talks, while she would provide "strong and stable leadership" to clinch a good deal for Britain.
But her campaign unravelled after a policy u-turn on care for the elderly, while Corbyn's old-school socialist platform and more impassioned campaigning style won wider support than anyone had foreseen.
In the late stages of the campaign, Britain was hit by two Islamist militant attacks that killed 30 people in Manchester and London, temporarily shifting the focus onto security issues.
That did not help May, who in her previous role as interior minister for six years had overseen cuts in the number of police officers. She sought to deflect pressure onto Corbyn, arguing he had a weak record on security matters.
With the smaller parties more closely aligned with Labour than with the Conservatives, the prospect of Corbyn becoming prime minister no longer seems fanciful.
That would make the course of Brexit even harder to predict. During his three decades on Labour's leftist fringe, Corbyn consistently opposed European integration and denounced the EU as a corporate, capitalist body.
As party leader, Corbyn unenthusiastically campaigned for Britain to remain in the bloc, but has said Labour would deliver Brexit if in power, albeit with very different priorities from those stated by May.
"What tonight is about is the rejection of Theresa May's version of extreme Brexit," said Keir Starmer, Labour's policy chief on Brexit, saying his party wanted to retain the benefits of the European single market and customs union.
Analysis suggested Labour had benefited from a strong turnout among young voters.
The campaign had played out differently in Scotland, the main faultline being the SNP's drive for a second referendum on independence from Britain, having lost a plebiscite in 2014.
SNP leader and First Minister Nicola Sturgeon said it had been a disappointing night for her party, which lost seats to the Conservatives, Labour and the Liberal Democrats.
Scottish Conservative leader Ruth Davidson said Sturgeon should take the prospect of a new independence referendum off the table.