Flanders chief set to lead next Belgian government

By Philip Blenkinsop

BRUSSELS (Reuters) - Belgian voters punished the liberal-socialist government in an election on Sunday and cleared the way for Flemish premier Yves Leterme to become prime minister and pursue a devolution of power to the regions.

Guy Verhofstadt conceded his 8-year term as prime minister was at an end after his liberals slid from being Flanders' strongest party to third place with most of the results counted.

Economic and foreign policy are unlikely to change radically but the result could prompt fresh haggling over power-sharing among the regions. Forming a government may take at least three months in a country where political compromise is the norm.

Leterme's Christian Democrats and their small nationalist allies N-VA saw their share of the vote surge to 30.5 percent in the northern region that is home to 60 percent of Belgians.

Belgium's likely next prime minister claimed victory before rapturous supporters waving the Flemish flag.

"It seems to be a very large victory so I'm very happy," the 46-year-old told Reuters television. He vowed to work for "a modern restructuring of the state".

Leterme wants the regions, already responsible for public works, transport, agriculture and the environment, to have more control over labor policy, justice and health. The francophone parties will take some convincing.

Verhofstadt told party workers his time was up.