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.
But she added: "For us to have come from such a long way back, supposedly, to be in a position where we could form the next government is an extraordinary performance on behalf of the Labour Party and shows what we can do when we unite".
"She's staying, for now", the source told Reuters. Several news outlets are reporting that The Conservatives now have 318 seats in parliament, Labour 261, Scottish National Party 35, Liberal Democracts 12, and the Democratic Unionist Party 10. The DUP said only that it would enter talks.
Labour has taken seats from the Conservatives including Battersea and Canterbury and have unseated former Lib Dem leader and Deputy Prime Minister Nick Clegg in Sheffield Hallam.
When May called the election seven weeks ago, she was seeking to capitalize on opinion polls showing that her Conservatives had a wide lead over Labour.
European Union leaders expressed fears that May's shock loss of her majority would delay the Brexit talks, due to begin on June 19, and so raise the risk of negotiations failing. But EU Council President Donald Tusk said: "We know when they must end".
Theresa May pledges a new government based on 'certainty'
DUP leader Arlene Foster has said her party is entering into discussions with Theresa May about forming a new government . May fell short of the eight seats needed and will now have to rely on the DUP's 10 MPs to pass legislation.
Labour overturned a wafer-thin Conservative majority in Derby North to win by nearly 2,000 votes in what was tipped before the election as a key test seat for Corbyn because it was the most marginal constituency in England. If accurate, the result will confound those who said Labour's left-wing leader, Jeremy Corbyn, was electorally toxic.
But May, facing scorn for running a lacklustre campaign, was determined to hang on. She could do this either by forming a formal coalition with one or more other parties, which would give those parties seats in her Cabinet.
Earlier, May had suggested the deal with the DUP was already done, saying: "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's demands are likely to be similar to a list it published before the 2015 general election, where the Conservatives ultimately secured a majority and did not need DUP support. The pollsters had her turning great swathes of the country blue and her inner circle privately talked about a 100 seat majority. The 317 seats are less that the surprising tally of 330 the Conservatives won under Cameron in 2015, and obviously much less than the 370-plus she thought she could get.
Corbyn said May should "go...and make way for a government that is truly representative of all the people of this country".
"People are crying out for help and he's been working on that, he hasn't really been working on Brexit", she said, while locals browsed bric-a-brac displayed on her daughter's stall.
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May had hoped the election would focus on Brexit, but that never happened, as both the Conservatives and Labour said they would respect voters' wishes and go through with the divorce.
German conservative Markus Ferber, an European Union lawmaker involved in discussions on access to European Union markets for Britain's financial sector, was scathing.
A shattered Prime Minister told Sky News that those who lost out in their constituencies following a failed election campaign did not deserve to be ousted as she saw her Commons majority wiped out.
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. Steven Fielding, a professor of politics at the University of Nottingham, called her "a zombie prime minister".
The Tory campaign sought to make Mrs May an asset and she ended up being a liability.
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May made no reference to her party's damaging losses, leading the Evening Standard, edited by former Tory finance minister George Osborne, to splash the front-page headline "Queen of Denial".