Has there ever been an election where the two biggest parties form a coalition to govern?

I'm actually surprised that it is somehow alluded that having a coalition of the first two parites should be rare. It is rare in a two- or three-party system, since in these cases either one party alone has a majority, or the largest and the smallest have a majority.

As soon as you have 4 or more parties in the parliament, a coalition of the first (largest) and the smallest party may not be enough to have 50+% of votes. So you either have to get a third party on board to form a coalition of 3, or you need to seek a larger party as a partner for a coalition of 2. Both of these is not an easy task, since a larger party usually will have more opposing stances and differences compared to the first party. And they will be firmer in defending those stances, since they have a large part of the population behind them. Smaller parties will be more inclined to compromise in order to get into government, which they would otherwise seldom have a chance to do. However, having to bring two or more small parties, which usually also have even more differences among themselves, into a coalition can also be nearly impossible, even if each small party alone would be willing to compromise.

At the end, it's all up to negotiating skill and will to compromise on all sides. Coalition forming is among the hardest and toughest parts of politics these days.

In Switzerland this is how the country is supposed to be run, the coalition usually involves up to 6 or 7 different parties ! In fact our government has no president or Head of State but 7 "federal counselor" who are usually of the 4 largest parties, in order the correctly represent the population. It would be seen as disastrous if a single party got an absolute majority !

In Finland this has been the norm lately. Out of the last five parliaments, we've had a total of nine government coalitions, and seven of those have had the two largest parties in it.

• After the 2003 election, the Jäätteenmäki government and first Vanhanen government both had the Centre (largest), the Social Democrats (2nd) and the Swedish People's Party (6th).
• After the 2007 election, the second Vanhanen government and the Kiviniemi government both had the Centre (largest), the National Coalition (2nd), the Green party (5th) and the Swedish People's Party (6th).
• After the 2011 election, the Katainen government (dubbed "the six-pack" by the media) consisted of the National Coalition (largest), the Social Democrats (2nd), the Left Alliance (5th), the Greens (6th), the Swedish People's Party (7th) and the Christian Democrats (8th).
• The Katainen government was replaced by the Stubb government with the same parties, except the Left Alliance.
• After the 2015 election, the Sipilä government consisted of the three largest parties: the Centre (largest), the Finns party (2nd) and the National Coalition (3rd). During this parliament, the Finns party broke into two due to internal politics, and the splinter group, the Blue Reform, stayed in government.

The exception is the very latest parliament. After the 2019 election, the Rinne and Marin governments have been led by the Social Democrats, and included the Centre, the Greens, the Left Alliance and the Swedish People's Party, with the opposition consisting of the second and third greatest parties: the Finns and National Coalition, respectively, along with the smaller parties the Christian democrats and Movement Now.

This is (or was until some years ago) the norm in the Netherlands.

Until about 10 years ago we rarely had coalitions of more than 2 parties. The largest and second largest are matched, and if they can come to a coalition agreement, there is a new cabinet.

Only reasons to add more parties (or go with another combination than the two largest) is when either the two largest have no majority OR they cannot reach a coalition agreement (which has happened once or twice). First case the third largest party is invited to join the talks, and more if needed, second case the second largest party is replaced with the third largest party and talks start all over again.

In British history this has happened at least twice. Although major parties seem to prefer coalition with smaller parties, or after that minority government, over coalition with their greatest rival.

In 1915, during the First World War, the Liberal government was replaced by a coalition of Liberal, Labour and Conservative parties under the incumbent Liberal PM, Herbert Asquith.

This was 5 years after the election which had produced a hung parliament - the Liberals remained in power and Asquith led a minority government from 1910 to 1915. So it was the war rather than the election which brought this coalition into being.

In 1940, the Conservative-dominated government was dissolved and replaced by a coalition of all parties under a new Prime Minister. Although the Conservatives had a large majority, even excluding the ex-Liberal and ex-Labour MPs who had been part of the previous humbug coalition ('National Government'), Churchill wisely decided to include the (real) Labour and Liberal parties in his government and give them senior positions in his cabinet.

So again, a collaboration between the two biggest parties, which wasn't demanded by an election result but by the situation facing the country.