COPENHAGEN, March 25 (Reuters) - Denmark's Prime Minister Mette Frederiksen handed in her coalition government's resignation on Wednesday after suffering a massive election defeat, but could still emerge as leader of a new cabinet in the coming weeks.
Analysts say the result was a voter revolt over broken economic promises of the outgoing centrist government and a sign that the electorate was tired of Frederiksen as a leader after seven years in power.
Frederiksen's Social Democratic Party had its worst election since 1903 on Tuesday, winning just 38 seats in the 179-seat parliament - down from 50 four years ago - amid voter concerns over the environment, the cost-of-living crisis and welfare.
Such domestic policy issues overshadowed the support gained from Frederiksen's defiant stance towards U.S. President Donald Trump's repeated ambitions to acquire Denmark's semi-autonomous territory Greenland, analysts said.
"This loss was larger than you could explain just by the cost of ruling," said Rune Stubager, a political scientist at Aarhus University.
POLARISED ELECTORATE SHIFTS TO FLANKS
Stubager attributed the defeat to polarising economic decisions, such as the controversial scrapping of a public holiday, tax cuts for high earners, and a last-minute proposal to introduce a wealth tax, which failed to resonate with voters.
The election reflected a broader trend of voters moving away from centrist parties towards anti-immigration and left-wing alternatives. Right-wing nationalist parties increased their share of the vote to 17%, from 14.4% in 2022, while the Green Left Party also gained ground.
The anti-immigration Danish People's Party also capitalised on concerns over inflation and living costs, promising to cut fuel taxes and staging campaign events offering discounted petrol to motorists, Stubager said.
While Frederiksen's tough immigration policies remained broadly in line with public sentiment, the domestic economic agenda, rather than her stance on migration, carried more weight in the election, analysts said.
NEITHER BLOC HAS A MAJORITY
Despite the setback, the Social Democrats remained Denmark's biggest party with 21.9% support, meaning Frederiksen is widely seen as having a good shot at returning for a third term as prime minister, albeit following tough and lengthy coalition talks.
"That is the paradox of the election, that the huge loser, Mette Frederiksen, the prime minister, she is the favourite to become the next prime minister as well," political analyst Noa Redington said.
Frederiksen's left-wing bloc secured 84 seats in parliament, slightly ahead of the right-leaning bloc's 77 seats, leaving both sides short of the 90 seats required to form a majority government. The centrist Moderates Party, led by Foreign Minister Lars Lokke Rasmussen, emerged as potential kingmakers with 14 seats.
Party leaders will on Wednesday hold individual meetings with the king to suggest a candidate for a first stab at forming a government.
Frederiksen acknowledged the fractured electoral landscape during a Wednesday debate, saying the result ruled out the possibility of forming a traditional right- or left-wing government.
"So what is left is that we need to cooperate. That is the message here," she said.
Since 2022, Frederiksen has led a grand coalition of the Social Democrats, the right-of-centre Liberal Party and the Moderates. The leader of the Liberal Party, Defence Minister Troels Lund Poulsen, has said he was no longer interested in coalition rule with Frederiksen.
(Reporting by Tom Little, Soren Jeppesen and Louise Breusch Rasmussen in Copenhagen and Anna Ringstrom in Stockholm, writing by Stine Jacobsen, editing by Alex Richardson)
