Iceland’s centre-right opposition parties are set for a return to power with nearly all votes counted after Saturday’s parliamentary election.

The Independence party has 26% and the Progressive party 24%, putting them on track to win nearly 40 of the 63 seats.

The ruling Social Democrats are trailing with around 13%.

It is a dramatic comeback for the parties widely blamed for Iceland’s economic meltdown in 2008.

Iceland saw its prosperity evaporate, as the country’s three banks collapsed, and the Social Democrats came to power a year later, with a programme of austerity tailored to international lenders’ requirements.

“The Independence party has been called to duty again,” said leader Bjarni Benediktsson, who looks likely to become prime minister.

“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,” he said.

“I’m very pleased,” said Sigmundur David Gunnlaugsson, leader of the Progressive party, as results came in.

Iceland’s centre-right opposition parties are set for a return to power with nearly all votes counted after Saturday’s parliamentary election

The centre-right camp has promised debt relief and a cut in taxes.

The two parties are also seen as Eurosceptic, and their poll success could slow down Iceland’s efforts to become a member of the European Union.

The Eurosceptics argue that Iceland already gets most of the benefits of full membership through existing free trade arrangements with the EU and by being part the Schengen visa-free travel zone.

Many Icelanders have become frustrated with the outgoing Social Democrat government, saying that its austerity policies were too painful.

A number of smaller parties have performed well, including Bright Future, which looks set to enter parliament with six seats and the computer activist Pirate party, with three.

The Social Democrats are on course for nine seats and the Left-Greens seven.

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