LONDON (Reuters) - British Prime Minister Theresa May's government said on Thursday it would launch her policy programme next week, a sign of confidence she will strike a deal to stay in power after days of political uncertainty since losing her majority.
Conservative Party sources say May wants to show her government is up and running but her loss of authority in last week's election will make it harder to handle a hectic agenda - Brexit talks with the EU, tackling a slowing economy, a political crisis in Ireland, and a devastating fire in London.
The pound rose after the Bank of England came its closest in a decade to raising interest rates to counter higher prices after Britain's vote to leave the European Union - a move that could further squeeze Britons with big mortgages.
The London fire, which claimed at least 17 lives, forced the cancellation of the City of London's Mansion House dinner, where May's finance minister, Philip Hammond, had the chance to revive calls for a more business-friendly exit from the EU.
After touring the wrecked and fire-blackened apartment block and ordering an inquiry, May returned to talks to try to seal a deal with Northern Ireland's Democratic Unionist Party to secure the backing of their 10 lawmakers in parliament to help her pass laws and govern as Britain starts talks to leave the EU.
"The talks are ongoing, they are very positive, they are constructive. There is a steady dialogue between the two sides that has never stopped at any point. It continues and when the deal is done, it will be done," a senior source in the Conservative Party said on Thursday.
"We never put timescales on when we expect a deal to be done and I'm not going to start now."
Her failure to win a majority has put May under pressure over her Brexit plans from inside and outside her party and has prompted complaints about her choice of partner due to the DUP's stance on social issues such as gay marriage.
Colum Eastwood, leader of the SDLP, Northern Ireland's second-largest Irish nationalist party, said his party had a "positive" meeting with the prime minister over her efforts to come up with a deal with the DUP.
"But we have to be honest, it will take much more than that for us to be convinced that the DUP tail is not wagging the Tory dog," he told reporters. "We want to see any deal between those two parties reflect the wishes of all of the people of Northern Ireland, not just one section of the community."
Northern Ireland's largest nationalist party Sinn Fein said it would oppose any deal that undermines a peace deal known as the Good Friday Agreement, with President Gerry Adams telling Britain: "We want to govern ourselves. You folks here make enough mess of your own elections, make enough mess of your own governments, make enough mess of your own affairs."
Earlier, Andrea Leadsom, leader of the lower house of parliament, said the government had agreed with Queen Elizabeth, who reads out the new government programme, that the "state opening of parliament will take place on 21 June 2017".
The start of parliament has been delayed since last Thursday's election, a gamble May took to strengthen her hand in talks to leave the European Union but which has left her scrambling for a deal to keep her in power.
Jeremy Corbyn, leader of Britain's main opposition, said his Labour Party would not support May's Queen's speech in the lower house of parliament to try to force her out of power through a vote of no-confidence.
The Conservative source said: "We're confident of getting an agreement, we're confident that the Queen's speech will be passed."
May's programme will most probably have to be watered down, dropping some of her preferred reforms to help get legislation through parliament and possibly having to give way to other ministers who have strong views over the direction of Brexit.
Before the Mansion House dinner was cancelled because of the fire, finance minister Hammond had been due to tackle fears among the financial elite that May's insistence that "no deal is better than a bad deal" would cost them business.
May's government has said its Brexit plans remain the same, and her Brexit minister David Davis will be pressing for close economic ties but a clear break with the bloc to be able to control immigration and restore sovereignty over British laws.
The Conservative source said the talks to leave the European Union would not be delayed, removing the question mark over the negotiations being derailed by May's lack of a parliamentary majority lost in an election she did not need to call.
Davis plans to go to Brussels on Monday to start the negotiations, which will reshape not only Britain's role in the world, but also that of a bloc praised for ensuring peace after World War Two.
But some opposition politicians say that May can no longer stick to her stance for a clean break with the EU, characterising her election bid as a poor gamble that has left Britain a laughing stock.
"Look at what the Tories (Conservatives) have managed to do to the UK in the space of just one year, firstly calling a divisive and reckless EU referendum .. then having lost that gamble pursuing a hard Brexit path," Scotland's first minister, Nicola Sturgeon, said.
"And if that wasn't enough, calling an unnecessary general election purely for the self interest of the Conservative Party and having mucked that campaign up they are now putting the country in hock to the DUP."
additional reporting by Elisabeth O'Leary, Writing by Elizabeth Piper; Editing by Keith Weir and Peter Millership