5 things to know about Britain's election

The United Kingdom is holding its first general election in five years on Thursday. Polls close at 10 p.m. local time (5 p.m. ET).

In 2010, Britain formed the first formal coalition government since World War II: an alliance between the right of center Conservative Party and centrist Liberal Democrats.

Here are five things you need to know about an election that polls suggest will be one of the closest — and most difficult to predict — in British history.

IT MAY BE INCONCLUSIVE

Prime Minister David Cameron's Conservative Party is likely to win the most seats. His chief rival to occupy 10 Downing St., left-of-center Labor Party leader Ed Miliband, will probably finish a close second. However, neither party is expected to win a majority — 326 of the 650 seats in the House of Commons. So the party with the most seats may not form the next government.

Who rules depends on how minor parties fare and whether Cameron or Miliband can put together a majority coalition with one or more of these parties to form a government. Negotiations could take weeks but must conclude by May 27, when Queen Elizabeth II gives a speech reflecting the new government's legislative priorities.

VOTERS DON'T ELECT THE PRIME MINISTER DIRECTLY

Britain has an electoral system with each of its 650 geographical areas containing about 60,000 voters. Each elects its own Member of Parliament, much like U.S. congressional elections.

Under Britain's parliamentary system, voters don't choose the prime minister directly. The leader of the next government is chosen by the members of Parliament. However, the influence of U.S.-style elections with its focus on personalities often prompts voters to elect a local candidate representing the party whose leader the voters prefer.

WHAT'S AT STAKE FOR BRITAIN

The biggest decision is how the next government deals with the country's huge budget deficit at a time when economic growth is moderate and public spending remains high.

According to the non-partisan Institute for Fiscal Studies, all four parties seen as contenders in a new coalition government — Conservatives, Labor, Liberal Democrats and the Scottish National Party — are planning to reduce further the large-scale government borrowing that peaked at the height of the financial crisis in 2009.

Other issues looming: the Conservative Party's promise to hold a referendum on whether Britain should exit the European Union, and the SNP's pledge to seek independence for Scotland despite last year's vote to remain part of the United Kingdom.

Listen to Kim Hjelmgaard's interview with Michael Wolff about the extremely close race in the UK election in the audio player below:

THE IMPACT ON U.S. RELATIONS

Britain's "special relationship" with the United States is not likely to change no matter who forms a new government. The close economic, military and political ties between the two allies across the Atlantic have been durable for two centuries.

One possible change, however, is that Britain may become a less active U.S. partner in military operations around the world as it continues to make deep cuts in its defense budget. Nicholas Burns, a former U.S. ambassador to NATO, told the Financial Times last week: "Until recently, Britain was very much our most trusted, dependable and capable ally" but may soon not play a "central role in global affairs" as a result of the military cuts.

Indeed, if the SNP forms a ruling coalition with Labor, it may push to follow through on its pledge to disband the Trident nuclear missile submarine base located about 25 miles west of Glasgow. The base constitutes Britain's nuclear deterrent but is technically dependent on the U.S. for supply and maintenance.

HOW FINANCIAL MARKETS MAY REACT

The markets already appear to have priced in a dead heat in this election.

"The political uncertainties this year appear to be extremely high. There is risk that the U.K. may have to wait a relatively long period before a coalition government is formed," Dutch bank Rabobank wrote in a recent note to investors. "That said, if the 2010 election is used as a precedent, it may be assumed that election jitters may be fairly muted in the coming weeks."

Although the Conservative Party is seen as most business-friendly, its commitment to hold a referendum on European Union membership has unsettled the business community, which sees value in being part of the world's largest market.