REYKJAVIK (Reuters) - Iceland's Social Democrat Prime Minister Johanna Sigurdardottir said on Thursday she would not seek re-election but retire from politics next year after serving out her term as the country's first female prime minister.
Her decision creates political uncertainty in the island nation that has just begun recovering from a severe financial crash in 2008 and is locked in a fierce debate about whether to join the European Union and the euro.
"There is a time for everything, also for my time in politics which has been long and eventful. Now I believe it is time for others to take the baton that was passed to me following the crash," she said.
"I have therefore decided to leave political life at the end of this term," the prime minister, who turns 70 next week," said in a statement on her party's website.
Sigurdardottir, at the head of a Social Democrat-led coalition, became prime minister in 2009 when the government in power at the time of the financial crash fell following weeks of popular protests.
Her government has pushed through sharp cuts in state spending. Most Icelanders have accepted the tough measures as a necessary evil but the wave of popular support that swept her into power has been tempered.
She led Iceland into EU accession talks, but the issue remains divisive in the fiercely independent country of just 320,000 people and is due to be decided in a referendum once the negotiations with the 27-nation bloc are over.
A former airline stewardess and trade union official who has been an MP for more than three decades, Sigurdardottir leaves no obvious successor to lead the Social Democrat Alliance in the elections less than a year away.
Former Economics Minister Arni Pall Arnason has been mentioned as a possible candidate to succeed Sigurdardottir, who has long been one of Iceland's most respected political figures.
(Reporting by Omar Valdimarsson; Writing by Niklas Pollard; Editing by Andrew Osborn)