Iceland is ready to set up a new coalition government, complete with a center-right majority. The Independence, and the liberal Reform and Bright Future parties will form the majority coalition, 10 weeks after a snap election.

"We finally managed to put this together ... I am very happy with this agreement," said Independence Party leader Bjarni Benediktsson, who will become the next prime minister.

The Bright Future said it backed a deal to form the government overnight. "The agreement was, after a discussion, voted on by the management by electronic voting and was accepted by the party," said Bright Future spokesman Unsteinn Johannsson. The Bright Future Party has four seats in Icelandic parliament.

The Independence Party won 21 seats from the early general election in October, and the Reform Party secured seven seats, giving the coalition 32 seats, just enough for a majority in the 63 seat legislature.

With the coalition finally agreed, the Left-Green and Pirate parties, which the Independence Party previously attempted to form a coalition with, now form part of the opposition. They are joined by the Progressive Party, whose leader and previous prime minister was named in the Panama Papers, and the Social Democrat Alliance. 

Potential move to the EU

The government programme calls for a referendum to join the European Union. Iceland previously applied to join the EU in 2009, one year after the economic crash that left the country almost bankrupt. This made some Icelanders argue for closer ties to Europe and joining the euro may prevent future crises.

Mmembership talks, opposed by the Independence Party, would however not be discussed until "the end of the
legislative period."
 

kbd/rt (dpa, Reuters)