Icelanders fed up with years of belt-tightening yesterday looked set to oust the ruling Social Democrats, wooed with pledges of tax cuts and debt relief from the centre-right, which presided over a spectacular financial collapse five years ago.

Leaden skies and driving sleet were a fair reflection of the mood of voters who have seen promises of a quick recovery fade, while mortgage debts rise, prices soar and crippling capital controls keep investment at a record low.

“I’m losing hope, to be honest,” said Katrin Johannsdottir after casting her ballot in a school on the outskirts of the capital Reykjavik.

“It’s been five years of tightening my belt, cutting back, and waiting,” said the mother of two, whose inflation-indexed mortgage keeps rising, pushing her family deeper into debt.

Like many voters, she has little faith in the ability of politicians to make a difference. Whether because of disenchantment or the bad weather, the flow of voters to many polling stations appeared slow in the morning.

A recent Gallup poll indicated that only 15 per cent trust the Althing, the world’s oldest Parliament, founded in 930. That made it Iceland’s second least trusted entity after the banks.

With a population of just 320,000, the North Atlantic island became a European financial hub 10 years ago when its banks borrowed money cheaply and lured British and Dutch savers with high returns.