Iceland election result puts EU membership in doubt

The ruling Social Democrats and their Left/Green coalition partners were the main losers, with just 16 seats in total.

At the same time, a new pro-European party called Bright Future made a breakthrough, winning six places. The anti-copyright Pirate party also won its first three seats in Parliament.

With the Independence and Progressive parties opposed to Iceland joining the EU, the result places a huge question mark over the continuation of accession talks.

The outgoing Social Democrat government opened EU entry negotiations in 2009.

But some 16 of the 33 chapters of the EU's acquis communautaire are said to remain open for negotiations.

Discussions on fisheries policy, the largest sector in Iceland's economy, and on the Common Agricultural Policy have proved thorny.

Meanwhile, public support for EU membership has declined, with recent polls suggesting that just 25 percent of Icelanders support EU accession.

The election result also marks the return to government of the parties who presided over the near collapse of the Icelandic economy in 2008.

Iceland became an off-shore banking hub in the 1990s and 2000s, but in 2008 its main commercial banks collapsed with liabilities over 10 times the size of the country's economy.

The Social Democrats came to power in 2009 and borrowed $2 billion from the International Monetary Fund (IMF) to avoid defaulting on its debts.

Since then, it has seen a sustained recovery with economic growth averaging 2.5 percent and with unemployment below 5 percent.

But Icelanders were frustrated after years austerity, imposed by the Social Democrat coalition under the IMF package.

Independence party leader Bjarni Benediktsson, tipped to be the new PM, commented on the election outcome: "We've seen what cutbacks have done for our healthcare system and social benefits ... now it's time to make new investments, create jobs and start growth."