REYKJAVIK: The centre-right Progressive Party will form Iceland’s next government, likely to be a coalition with the Independence Party that shares its plans to end EU accession talks and cut household debt.
Progressive leader Sigmundur Gunnlaugsson, who could become one of Iceland’s youngest leaders at 38, has pledged an end to austerity and to return to growth five years after a spectacular banking collapse plunged the north Atlantic island into crisis.
“I will now talk to the leader of all the parties elected to parliament and only after that will I decide who would be invited for formal coalition talks,” he said after receiving his mandate from President Olafur Ragnar Grimsson yesterday.
His Progressives presided over much of Iceland’s dizzying economic rise, when home owners took on huge mortgages, the country attracted billions of dollars of Dutch and British savings with its relatively high rates, and banks grew to more than 10 time its gross domestic product.
The Independents, coalition partners of the Progressives in many past governments, were in power when the banks collapsed in a matter of days in late 2008, sending its currency into freefall and tripling unemployment virtually overnight.
Voters punished the Social Democrats on Saturday, handing the biggest defeat to any ruling party since independence from Denmark in 1944.
Reuters
