Denmark's government ousted as anti-immigration party surges

[COPENHAGEN] Danish voters ousted the government of Prime Minister Helle Thorning-Schmidt and backed an opposition in which the anti-immigration Danish People's Party emerged as the biggest force.

"What's key for us is that we get the most influence," Kristian Thulesen Dahl, leader of the People's Party, said in an interview in Copenhagen.

The party won one-fifth of the votes, almost doubling its backing since 2011, after promising Danes tougher immigration and asylum laws. The group is also skeptical toward Denmark's membership in the European Union and has argued in favor of border controls to defy the single market's free movement of labor.

The result marks a blow to a beleaguered EU, which faces the threat of a U.K. exit and a worsening crisis in Greece. The Danish People's Party has said it is willing to enter an alliance with other EU-skeptical parties that would ask Danes to vote much more often on European reforms.

Should the Danish People's Party take on Cabinet posts, "then Denmark's relationship with the EU will become a bit more difficult," Eva Soerensen, a professor at Roskilde University, said by phone.

Lars Loekke Rasmussen, head of the opposition group and the man now set to become prime minister, got 90 seats in the parliament, versus 85 for the government. The margin was wide enough to ensure that four seats reserved for Denmark's former Atlantic colonies of Greenland and the Faroe Islands weren't able to tip the balance.

Thorning-Schmidt Thorning-Schmidt, Denmark's first female prime minister, announced she would resign as leader of the Social Democrat Party. "Our efforts didn't get us as far as we'd hoped," she told party members. "We were defeated at the finishing line." The opposition won because Mr Rasmussen, who was also prime minister from 2009 until 2011, was able to direct the focus of the election campaign toward immigration,'' Ms Soerensen said. "Images of masses of refugees trying to cross the Mediterranean probably" also played a role, she said.

"The coming days will show whether it's possible to create a political platform that will pull Denmark in the right direction," Mr Rasmussen said in a speech to his party members.

Despite emerging as the biggest group in the winning bloc, Thulesen Dahl said it's not a given the Danish People's Party will aim for Cabinet posts.

"My view on where we can achieve the most influence isn't necessarily from inside the government," he said. The last time the party was part of a ruling alliance was from 2001 until 2011, when it provided parliamentary support without joining the Cabinet.

Danes live in one of the world's few remaining AAA-rated economies, where growth has made a timid return since a 2008 housing-market collapse stalled consumer spending. Famous for its generous welfare system, Denmark has also seen an increase in income inequality in recent years. The sitting government's response to the tougher economic climate was to means-test some benefits.

Mr Rasmussen has promised tax cuts and zero growth in welfare spending. The Danish People's Party is likely to resist those plans, targeting a bigger public sector. According to Nordea, the Danish economy is now "on the brink of a solid economic upswing," Chief Economist Helge Pedersen wrote in a note. The challenge is to keep the recovery on track without creating the risk of "overheating," he said.

"This election is very different from the vote in 2011," Kasper Moeller Hansen, a professor of political science at Copenhagen University, said before the results. Back then, it "was all about the economic crisis and the crisis agenda. That's not the case now. As the economy is improving, the issue of immigration has resurfaced."

BLOOMBERG