* Two centre right parties hold commanding lead
* Independence Party ahead in early results
* Voters promised debt relief, end of austerity
By Balazs Koranyi and Robert Robertson
REYKJAVIK, April 27 Iceland's centre-right
parties took a commanding early lead in elections on Saturday,
staying on course to return to power with promises of tax cuts
and debt relief just five years after presiding over the
country's spectacular economic collapse.
The Independence and Progressive Parties, which ruled the
nation, often in coalition, for nearly 30 years before the 2008
collapse, had collected close to half the votes counted so far,
putting them solidly ahead of the ruling Social Democrats and on
track to form Iceland's next government.
"People seem to have a very short memory," Halldor
Gudmundsson, 44, said after casting his ballot. "These are the
parties that got us into the mess in the first place."
With nearly 20 percent of overall votes counted, the
Independence Party, which was part of every government between
1980 and 2009, led with 24.9 percent, and the Progressive Party
was close behind with 22.7 percent, while the Social Democrats
were a distant third with 13.9 percent.
"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," said Independence
Party leader Bjarni Benediktsson, the favourite to become
Iceland's next prime minister.
With a population of just 320,000, Iceland became a European
financial hub 10 years ago when its banks borrowed money cheaply
and lured British and Dutch savers with high returns.
Growing unchecked under a relaxed regulatory regime, the
banks expanded to 10 times Iceland's GDP by 2008, then crashed
in a matter of days, leaving behind a long trail of debt and
bankruptcy and foreshadowing the trouble many other European
nations would face.
The Social Democrats stabilised the economy with a package
hailed as exemplary by the International Monetary Fund, but a
series of policy blunders, tax hikes, leniency towards foreign
creditors and inability to deal with soaring household debt cost
them their popularity.
"This government has done very little to get things going
and have moved us backwards in many ways, so it's about time it
steps down," Reykjavik voter Gudrun Gunnarsdottir, 36, said.
"I think we will see more investment and lower taxes, which
is what people, families and also companies in this country
need," she said after voting.
Both the Progressives and Independence centred their
campaign on household debt relief, arguing that households,
which suffered a 20 percent fall in both real wages and property
prices in 2009, could no longer shoulder the cost of recovery.