Iceland hopes to start accession talks with the European Union by July, although the island’s government and its 320,000 people remain deeply divided over whether to join the bloc.

Prime minister Johanna Sigurdardottir, leader of the Social Democrats, announced late on Sunday that she had finally reached a compromise on EU accession with the Left-Greens, who oppose membership, that would enable the two leftwing parties to form a new coalition after their election victory two weeks ago.