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Danish PM-elect says will form 3-party govt

Sun, 2 Oct 2011 18:08 GMT

Source: reuters // Reuters

* Social Democrat Thorning-Schmidt to form new govt

* 3-party govt's programme, ministers to be unveiled Monday

* Denmark gets its first female prime minister (Adds details, quotes)

By John Acher and Mette Fraende

COPENHAGEN, Oct 2 (Reuters) - Denmark's Prime Minister-elect Helle Thorning-Schmidt said on Sunday she had agreed with political allies to form a three-party coalition government to steer the nation out of an economic crisis.

Thorning-Schmidt, leader of the Social Democrats whose "Red bloc" alliance won an election two weeks ago, said she had completed a policy programme for the new centre-left government.

"It is a government programme that will bring Denmark out on the other side of the (economic) crisis," she said on TV2 News as she arrived at parliament house, Christiansborg, to brief her parliamentary group.

"With this programme we can modernise Denmark," she said before paying a brief visit to Queen Margrethe who gave her formal endorsement to form a government.

Thorning-Schmidt, 45, who will be Denmark's first female prime minister, aims to kickstart economic growth with a 10 billion crowns ($1.8 billion) stimulus package. She also plans to invest in education and infrastructure to create more jobs.

She has promised to balance the budget by 2020, but was expected to abandon a campaign plan to get Danes to work 12 minutes more per day to boost productivity.

After a decade of centre-right rule, the new coalition will consist of the Social Democrats, the Socialist People's Party and the Social Liberals, the alliance which unseated Liberal Prime Minister Lars Lokke Rasmussen in the Sept. 15 election.

Thorning-Schmidt said she would present the government's policy platform and new ministers on Monday.

Her chief of staff and economic adviser Bjarne Corydon, a 38-year-old newly elected member of parliament, would be appointed finance minister, daily Jyllands-Posten said. No official confirmation was available.

Morten Bodskov, another Social Democrat who had been seen as a finance minister candidate, would get the justice minister's job, Jyllands-Posten said.

Socialist People's Party leader Villy Sovndal would be foreign minister and his fellow party member Ole Sohn, a former communist leader, would become business minister, TV2 News said.

The new government would accept its predecessor's plan to phase out an early pension scheme, but would give an extra six months of unemployment benefits to those set to lose them under the previous government's policy, Jyllands-Posten said.

It said the new government would ease immigration policy, making it easier to reunite families.

TV2 News said the Integration Ministry, created in 2001, would be shut down. A new post would be created for a minister for European affairs ahead of Denmark's turn as president of the 27-nation European Union in the first half of 2012.

The government will adopt a more ambitious goal for cutting emissions and boosting renewable energy, local media said.

FAR-LEFT SUPPORT

The government will rely for parliamentary support on the far-left Red-Green Alliance party, which made strong gains in the election but was not included in the coalition.

With the Red-Green Alliance, the coalition government will have a majority of 92 seats in the 179-seat parliament.

The Social Democrats are expected to get 11 ministerial portfolios, the Socialist People's Party six and the Social Liberals six, Danish media reported.

It is a disparate alliance. The centrist Social Liberals and the leftist Red-Green Alliance disagreed during the campaign on many points of economic policy from pension reform to taxes.

Social Liberal leader Margrethe Vestager was said by local media to have won many concessions in the talks to form the coalition, including blocking a "millionaire tax" on the rich and a plan to raise taxes on banks.

Commentators say the new coalition could be prone to instability if it proves impossible to balance the interests of the Social Liberals and Red-Green Alliance.

Thomas Larsen, political columnist at daily Berlingske, said it was crucial that Thorning-Schmidt had been able to engage the Social Liberals in the new government to secure its majority.

"That is a life insurance because if the Social Liberals and Vestager were outside the government, I think it would have been very hard for Thorning-Schmidt to survive," Larsen said.

He said bringing the Social Liberals aboard came at a price in terms of policy, but it would also make it harder for the new opposition to label the government as fiscally irresponsible.

Financial markets were unruffled by the Red bloc election victory over Rasmussen's Liberal-Conservative coalition, though some analysts have said the markets would punish Denmark later if spending got out of hand under the new administration. ($1 = 5.452 Danish crowns) (Editing by Rosalind Russell)