Lib Dem leader vows to keep economy safe

The second-biggest opposition party could hold the balance of power after an election expected in May.

Lib Dem leader Nick Clegg said his party would be the "guarantor of good sense" as Labour and the Conservatives squabble over how to tackle the record 178 billion pounds deficit, more than 12 percent of Gross Domestic Product.

"We are the guarantor -- whatever the outcome of the election -- that no risks will be taken with Britain's financial position," he told party activists at the end of a weekend conference in Birmingham.

The Lib Dems, seeking to position themselves between their two larger opponents, say they will shortly spell out a programme of 15 billion pounds of cutbacks, but would hold them back for at least 12 months until the economy was ready.

"Anyone who has ever cut back a tree knows there are many ways to do it," Clegg told the conference, the party's last major gathering before the election.

"You can cut back badly and kill the tree. Or you can do it in a way that helps the tree to flourish."

HUNG PARLIAMENT

Polls show the gap between Labour and the Conservatives narrowing enough to prevent either gaining an overall majority and creating a hung parliament -- giving the Liberal Democrats a rare chance to influence policy.

The Conservatives want an early start to cutting the deficit, incurred after the economy suffered its worst recession for generations, in order to protect Britain's credit rating.