Meltdown fallout: Iceland govt falls

Iceland’s coalition government collapsed under the pressures of a financial meltdown and Prime Minister Geir Haarde said he would hand in his resignation to President Olafur Ragnar Grimsson.

Iceland’s coalition government collapsed on Monday under the pressures of a financial meltdown and Prime Minister Geir Haarde said he would hand in his resignation to President Olafur Ragnar Grimsson.

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“I really regret that we could not continue with this coalition. I believe that that would have been the best result,” he told reporters at parliament.

Foreign Minister Ingibjorg Gisladottir, the Social Democrat leader who had been considered a potential replacement for Haarde, announced she would not seek to be prime minister and would take a leave of absence for one or two months.

Haarde's government, a coalition between his Independence Party and the Social Democratic Alliance, has been under pressure since the global financial crisis hit Iceland in October, causing the collapse of its banks following a decade-long boom fuelled by cheap foreign funding.

“I will go to the president and hand in the government's resignation,” Haarde told reporters on Monday.