Icelanders are set to cast their votes on November 30, following the dissolution of a contentious coalition government, which has led to an early election where economic concerns are paramount.

With persistent inflation and high interest rates, issues such as the economy, housing, and healthcare are at the forefront of voters' minds in a country where approximately 268,000 people are eligible to vote.

In mid-October, Prime Minister Bjarni Benediktsson announced the resignation of the three-party, left-right coalition government. The coalition, comprising Benediktsson's Independence Party, the Left-Green Movement, and the centre-right Progressive Party, was fraught with divisions on matters ranging from foreign policy to asylum seekers and energy.

Eirikur Bergmann, a professor of politics at Bifrost University, observed that the coalition included two parties that were 'the furthest out on the economic scale, on the right and on the left.' 'Cooperation got increasingly difficult and there were more and more frictions,' Bergmann added.

The alliance ultimately collapsed due to disagreements over the handling of migrants and asylum seekers. Despite its role in the government's downfall, immigration is not a major concern for most voters, with one in five residents being foreign-born.

'It is very prominent in the public debate amongst politicians, but still it does not seem to be an issue that people are putting at the front of their list of important issues,' Bergmann said.

According to a Gallup poll published in early November, only 32 percent listed immigration as one of their five most important issues, and only 18 percent included asylum issues among their five.

In contrast, healthcare, economic issues, and housing were top concerns for 69, 62, and 61 percent respectively.

The coalition has seen a decline in voter support during its tenure. A recent poll by broadcaster RUV showed that only 49 percent of those who voted for the Independence Party in 2021 planned to do so again. For the government-allied Progressive Party, only 32 percent of its 2021 voters intended to stay with the party, according to the poll by analyst firm Maskina.

The Left-Green Movement, meanwhile, looks to retain less than a fifth of its voters and risks falling below the parliamentary cutoff of five percent, potentially leading to its exclusion from parliament.

In Icelandic politics, few parties have emerged unscathed since the 2008 financial crisis, which severely impacted Iceland's over-indebted banks and the country as a whole.

'In the last 15 years, voters in Iceland have been extremely critical of their governments and voted against the government in all elections except one,' Olafur Hardarson, professor of political science at the University of Iceland, told AFP.

The exception was Katrin Jakobsdottir of the Left-Green Movement, who retained the prime minister position in the last election. Benediktsson took over as prime minister in April 2024 after Jakobsdottir resigned to run for the presidency, which she failed to win.

Icelandic voters, according to Hardarson, are particularly changeable and 'in the last four elections in Iceland, between 40 and 50 percent of the voters have changed parties between elections.'

This year, Iceland has faced more than political upheaval. The southwestern Reykjanes peninsula, which had not seen a volcanic eruption for eight centuries prior to March 2021, has experienced seven volcanic eruptions this year alone, leading to multiple evacuations of the small fishing village of Grindavik.

On November 20, the country's central bank announced it was cutting its key rate by 0.5 percentage points to 8.5 percent. While inflation has subsided, it still stood at 5.1 percent year-on-year in October, compared to the bank's target of 2.5 percent.

Heading into the election, the Social Democratic Alliance, led by Kristrun Frostadottir, is ahead in the polls with 24 percent, according to an early November Gallup poll. Benediktsson's Independence Party polled in second place with 17 percent. The Centre Party and the Liberal Reform Party followed with 16 and 14 percent of support respectively.

According to Hardarson, if the election results align with the polls, a likely coalition would be the Social Democratic Alliance and the Liberal Reform Party, along with one or two others, as their policies are relatively close. However, he noted, 'This is difficult to predict because in Iceland the coalition game is relatively open.'

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