(Bloomberg) -- Iceland began the work to form a new ruling coalition after opposition Social Democrats won Saturday’s elections on the Atlantic island.
President Halla Tomasdottir met the leader of Social Democrats, Kristrun Frostadottir, early on Monday, and will consult with other parties’ chairs during the day, according to local media reports. She is expected to announce later in the day or on Tuesday whom she will tap to start formal talks on a new government, with the 36-year-old Frostadottir seen as a strong favorite.
The Yale-educated former chief economist of local investment bank Kvika hf led her party to a victory in the snap elections amid voter discontent with high costs of living and housing shortages.
The Social Democrats are expected to try to form an alliance with the opposition Liberal Reform Party, which campaigned on a similar platform of reining in sticky inflation and bringing state finances under control. Steered by lawmaker and former education minister Thorgerdur Katrin Gunnarsdottir, 59, the Liberal Reform came third behind the incumbent Prime Minister Bjarni Benediktsson’s Independence Party.
The Liberal Reform also agrees with the Social Democrats on closer cooperation with the European Union and similarly vows to impose a resource fee on the fishing and energy sectors. The duo would command 26 seats in the 63-seat parliament and are likely to need a third party to form a solid majority.
Benediktsson’s Independence Party, traditionally the largest in Iceland, still performed better than predicted by the polls, winning 14 seats. It vowed to cut state involvement in the economy, lower taxes and reduce red tape, while also strengthening border controls and restricting asylum policy.
The populist and right-wing Center Party, led by former Prime Minister Sigmundur David Gunnlaugsson, ran on a similar platform and would be a likely ally for the Independence Party. Gunnlaugsson served as premier in 2013-2016.
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