The LibDems have agreed in principle to cutting this year already. In fact, Labour's refusal to consider cutting this year is one of the issues which torpedoed the LibDem-Labour discussions. The cabinet offer is also rumoured to be Vince Cable as Business Secretary supporting George Osborne as Chancellor, which would actually be very popular in the city (who are nervous about Osborne's lack of experience, his chumminess with Mandelson and a slightly dodgy expenses account and like the much more experienced and wily Cable's financial acumen).

The remaining point is PR. The Tories have offered a referendum on AV (the Alternate Vote system) rather than full PR, which is pretty weak. But it is a notable improvement over FPTP for the smaller parties, and the LibDems may be able to accept it as a compromise, although it will be a bitter pill to swallow. But maybe doable in return for the tax reforms and a say in the economic policy.