Iceland set for change of government as surging prices dominate election

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Iceland set for change of government as surging prices dominate election

By Louise Rasmussen, Isabelle Yr Carlsson and Jacob Gronholt-Pedersen

COPENHAGEN (Reuters) – Iceland holds a snap election on Saturday with voters likely to topple the ruling coalition in their quest to escape a cost-of-living crisis, although an expected severe snowstorm may delay tallying of ballots.

The North Atlantic island nation, home to 384,000 people, has enjoyed relative political stability since 2017 and ranks among the wealthiest countries in Europe per capita, bolstered by tourism, fisheries, and cheap geothermal- and hydroelectric-powered aluminium production.

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However, inflation and borrowing costs near their highest level since the 2008 financial crisis have helped spark an economic slowdown, propelling growing hardship to the forefront of voters’ concerns.

A series of volcanic eruptions near the capital Reykjavik, causing displacement of thousands and costly infrastructure repairs, have compounded issues by dampening tourism.

Polls open at 0900 GMT on Saturday and close at 2200 GMT, with a final result expected on Sunday morning.

However, a fierce snowstorm was forecast to hit the eastern part of the country on Saturday, which could delay vote counting, and authorities encouraged voters to cast their ballots early.

Polls indicate the ruling coalition of the Left-Green Movement, the ************* Independence Party, and the center-right Progressive Party, in power for the last seven years, is likely to be unseated.

“We’ve had the same coalition for seven years, and there seems to be a ******* now for new people in government,” said Stefania Oskarsdottir, a political scientist at the University of Iceland.

Katrin Jakobsdottir of the Left-Green Movement resigned as prime minister in April to run for the presidency, a bid she lost. Her replacement, Bjarni Benediktsson of the Independence Party, dissolved parliament in October and called an election following escalating coalition disagreements and public discontent over migration and energy and housing issues.

Iceland’s population has surged by 20% over the past decade, the most significant increase among OECD nations, fueled by high immigration rates, further pressuring housing and healthcare.

While inflation and interest rates have recently started to decline, the cost-of-living crisis has reignited the question of EU membership in election debates. Polls suggest the pro-EU Social Democrats and the ******** Reform Party combined would garner 40% of votes.

The centre-left Social Democratic Alliance, last in government between 2009 and 2013, stands to gain a little over 20% of votes, followed by the centre-right ******** Reform Party.

“The biggest issue here right now is cost of living,” Social Democratic leader Kristrun Frostadottir told Reuters in an interview.

The 36-year-old economist, who took over as party leader two years ago, is a champion of the Nordic ******** model and a favourite to become the new prime minister.

(Reporting by Louise Breusch Rasmussen, editing by William Maclean)

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