Labour Party rules out coalition with Scottish nationalists

By Andrew Osborn and Guy Faulconbridge LONDON (Reuters) - The Labour Party ruled out forming a coalition government with the Scottish National Party (SNP) after a May 7 national election, a tactical move it hopes will resurrect its flagging fortunes in Scotland and calm nervous English voters. Since Scots voted by 55-45 percent to preserve the United Kingdom in a referendum last year, support for the SNP has surged, largely at the expense of Labour, on a perception that Britain's rulers are backsliding on pledges to grant Scotland more powers. Such strong support risks disrupting the outcome of the closest UK-wide election since the 1970s and handing the SNP the balance of power in the British parliament, a prospect that has spooked some business leaders and politicians. With opinion polls showing it faces all but being wiped out in Scotland at the SNP's hands, Labour has been under mounting pressure from its own lawmakers to rule out an SNP deal. "It will not happen," Labour leader Ed Miliband said on Monday of a possible formal coalition with the SNP. "Labour will not go into coalition government with the SNP. There will be no SNP ministers in any government I lead." Miliband did not rule out striking an informal deal however, a decision likely to ensure that speculation about such an arrangement will continue. Ruling out formal cooperation with the SNP, which still wants Scotland to break away from Britain, but which is also, like Labour, left-wing, could help persuade Scots a vote for the nationalists is a wasted vote, Labour hopes. Labour is also under pressure from Prime Minister David Cameron's Conservatives who have run an ad campaign showing Labour leader Ed Miliband in the pocket of SNP heavyweight Alex Salmond, suggesting a vote for Labour risks teeing up an alliance "between the people who want to bankrupt Britain and the people who want to break up Britain." Scotland's First Minister and SNP leader Nicola Sturgeon said Miliband's statement had changed nothing. "Mr Miliband's statement is absolutely fine from our point of view, because formal coalition with seats in the UK government has never been our preference anyway," she said in a statement. "The other arrangements which have not been ruled out - such as confidence and supply, and voting on an issue by issue basis - are the options we believe are best for Scotland anyway." An opinion poll earlier this month suggested Labour risked losing its safest seat in Scotland, that of retiring former prime minister Gordon Brown, and that huge swings in support to the SNP threatened most of its 41 seats there. Sturgeon had earlier on Monday tried to allay fears that the SNP would use any influence it wielded with the next government to crack apart the United Kingdom. "I want to see progressive change across the UK ... So that's why you can trust me and the SNP to play that constructive role," she told students at the London School of Economics. (Additional reporting by William James; Editing by Toby Chopra)