Denmark's first woman PM takes over

Denmark's prime minister-designate started work today on moulding a united government from a scattered "red bloc" of ex-communists and pro-market liberals that ousted a rightist coalition in a parliamentary election.

Social Democratic leader Helle Thorning-Schmidt, 44, is set to become Denmark's first female head of government after her alliance secured 92 seats and a narrow majority in the 179-seat Folketing.

The outcome of the ballot on Thursday ended 10 years of centre-right rule and cut the influence of the Danish People's Party, an anti-immigration group that had used its leverage in the legislature to clamp down on asylum-seekers, especially Muslims.

Ms Thorning-Schmidt, who is married to Stephen Kinnock, the son of the former British Labour leader, now faces the challenge of crafting a joint platform for her diverse coalition of former Marxists, environmentalists, Social Democrats and Social Liberals.

The "red bloc" parties do not agree on taxes and welfare cuts needed to shore up public finances amid Europe's debt crisis.

"What we need to start doing is to get a grip on the economy. That is what we need a new government for," Ms Thorning-Schmidt told Denmark's TV2.

Social Liberal leader Margrethe Vestager - whose party straddles the middle of Danish politics - opposes Ms Thorning-Schmidt's plans for tax hikes for wealthy Danes. And unlike the leftist parties, she approved the previous government's plans to phase out a costly early retirement scheme.

Ms Vestager said she will not back away from that agreement.

"We have made a deal which we believe is really good. It means that we will get more money in the chest and a sound economical starting point," she said.

The outgoing government's austerity measures also include gradually raising the retirement age by two years to 67 by 2020 and trimming benefit periods for the unemployed.

It said the measures were needed to safeguard the welfare system while balancing the budget. After years of surpluses, the government projects budget deficits of 3.8 % of gross domestic product in 2011 and 4.6 % in 2012.

Outgoing Prime Minister Lars Loekke Rasmussen handed in his resignation to Queen Margrethe, Denmark's figurehead monarch. His Liberals gained one seat and remain the biggest group in Parliament, but lost power because their Conservative coalition partner dropped 10 seats while the Danish People's Party - which backed them in Parliament - lost three.

The power shift is not likely to yield major changes in consensus-oriented Denmark. The "red bloc" is likely to focus more on integrating immigrants already in the country, than opening up the borders to more.

There is also broad agreement on the need for a robust welfare system financed by high taxes, though parties differ on the depth of cuts needed to keep public finances intact amid the uncertainty of the global economy.

Ms Thorning-Schmidt told TV2 she aims to have a coalition government in place when Parliament reconvenes October 4.