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Tags: Sweden | Swedish government | budget

Swedish Government Losing Grip on Power as Budget Defeat Looms

Wednesday, 03 December 2014 09:22 AM EST

Sweden's minority government looked certain to lose a budget vote on Wednesday as the anti-immigration Sweden Democrats flexed their political muscles, a move that may force Prime Minister Stefan Lofven to call a snap election.

The far-right group, shunned by the mainstream parties, has held the balance of power since September's election and plans to vote with the main opposition bloc on the budget.

The party has threatened to make Sweden effectively ungovernable unless Sweden imposes the kind of tough immigration policies adopted in neighboring Denmark. It wants Sweden to cut asylum seeker numbers by 90 percent.

"The Sweden Democrats' decision that they will vote against any budget that doesn't dance to their tune creates a totally new political landscape," Finance Minister Magdalena Andersson said in the budget debate.

"It fundamentally changes the parameters for how the country can be governed," she said.

Daily Dagens Nyheter said the government, widely seen as the weakest in decades, faced "Doomsday."

"Racism has taken Sweden hostage," it said in a headline.

Parliament will vote on the budget at about 1500 GMT, and if, as expected, it fails to pass, Lofven's options are limited.

"We may call snap elections later, when the constitution allows. We could also resign and there are other alternatives," Lofven told reporters after the four-party center-right opposition Alliance rebuffed him in late-night talks on Tuesday.

If he resigns, Lofven could still be asked by the speaker of parliament to form a new government, but it is doubtful whether he could build a stable administration.

The most likely result is a snap election, which Lofven cannot call before Dec. 29 and which must take place within three months.

The crisis has jarred the view of a country often held up as a paragon of political and fiscal stability in contrast to crisis-hit Europe, and business leaders called on the mainstream parties to find a solution.

"I hope both sides shoulder their responsibilities and build a strong government that can focus on important issues for the future: growth, education and so on," Hakan Samuelsson, the CEO of Volvo Cars, one of Sweden's biggest private employers, told Reuters.

Sweden's low government debt and relatively robust growth are likely to trump political uncertainty in the short term at least and markets were calm with the crown strengthening against the euro after losses on Tuesday.

Riksbank Deputy Governor Per Jansson said the government crisis did not require any response from the central bank.

If parties could not form a stable government in the longer term, however, "that could lead to concern in markets . . . but you can't really see that now," he said.

Analysts warned a new vote would not necessarily produce a stable majority government of either center-left or center-right in light of the Sweden Democrats' hard-ball tactics.

September's vote revealed a split electorate, worried that Sweden's cherished welfare state is failing after eight years of tax cuts under the previous center-right government but also unconvinced by the Social Democrats' tax and spend promises.

The only winners in the election were the Sweden Democrats, who doubled their vote to become the third largest party, echoing successes for the far right across Europe in recent elections.

In neighbors Denmark and Finland, anti-immigration parties are now among the three most popular in some polls. In Norway, a rightist populist party is in the ruling coalition.

"The Alliance and the Social Democrats have brought this on themselves by not reaching a deal straight after the election," 75-year-old pensioner Stig-Ove said. "Now they have to find a way to bridge the political divide."

© 2023 Thomson/Reuters. All rights reserved.

Sweden's minority government looked certain to lose a budget vote on Wednesday as the anti-immigration Sweden Democrats flexed their political muscles, a move that may force Prime Minister Stefan Lofven to call a snap election.
Sweden, Swedish government, budget
Wednesday, 03 December 2014 09:22 AM
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