Sweden is sinking into political chaos as the Prime Minister is deposed
SWeden’s Prime Minister Stefan Lofven lost a vote of confidence in parliament, overthrew his minority coalition and plunged the largest Nordic economy into political chaos.
Lofven says he will now talk to his allies in parliament to find out if he can still patch up a viable coalition. If that fails, he could call a quick election, he said after losing Monday’s vote. If Swedes are forced to go to the polls prematurely, it would be the first time since 1958. If Lofven resigns, the Speaker of the Riksdag will ask the largest parties to try to form a new government until the planned elections next year.
The krona changed slightly against the euro after the vote, with most analysts pointing to Sweden’s stable budget, low indebtedness and the highest credit rating as lasting measures that will probably be unaffected by the political turbulence.
The Prime Minister’s fate seemed sealed after he refused to back down from a deregulation plan aimed at Sweden’s rental housing market. Lofven’s initiative, a Social Democrat who has been chairman of a fragile minority coalition since the incomplete election in 2018, upset the Left Party, which said that Lofven had crossed a red line.
The left then won the support of a group of conservative and nationalist parties, eager to throw out their political enemy. On Monday, 181 of the 349 legislators in Sweden’s Riksdag voted against Lofven.
The Sweden Democrats
Lofven’s dismissal is the latest sign that Swedish politics has changed fundamentally since the emergence of the anti-immigrant Sweden Democrats. The party holds just under a fifth of the seats in the country’s parliament, which prevents both blocs from reaching an absolute majority. That reality has led the right-wing parties to agree to consider cooperating with the Sweden Democrats, who were once considered too xenophobic to be embraced by the mainstream.
Carl Bildt, former Swedish Foreign Minister, quickly noted the historic nature of Lofven’s defense, as he becomes the first head of government in the country’s history to lose his mandate through a no-confidence vote.
“For the first time ever in a prime minister was defeated in a vote of confidence. In principle, the formulas that have governed the country since 2018 collapsed. It is not easy to see how a new election can be avoided,” Bildt tweeted.
The economy
Sweden’s political instability has not yet affected the economy, according to Johanna Jeansson at Bloomberg Economics. “Confidence in Sweden’s economic prospects is stronger than confidence in the government,” she said on Monday.
“We expect that the ongoing recovery will continue as the pandemic eases its grip on domestic and Swedish export markets,” said Jeansson. “Weak governance is more of a very long-term risk, which dampens the prospects for necessary structural reforms of the housing and labor markets.”
But Minister of Finance Magdalena Andersson expressed her concern on Monday and pointed to the need for stability when Sweden navigates its way out of a pandemic where it lost many more lives than its neighbors in the Nordic region.
“A political crisis is not good in this economic situation,” she told reporters in Stockholm. “We have just begun an economic recovery and many companies are considering hiring, investing and there is a risk that those decisions will be postponed as a consequence of political uncertainty.”
GDP: Sweden is ahead of the EU majors
Lofven, a 63-year-old former union leader and welder, has spent the past 2 1/2 years in a coalition that looked shaky from the start. His Social Democrats ruled together with the Greens, and could only remain in power as long as they were backed by the Left Party, the Center Party and the Liberals, who face eye to eye on a few important laws.
Until today, the Prime Minister had survived seemingly difficult conflicts and emerged victorious from previous no-confidence motions against him. His resignation from office now paves the way for an uncertain political future in Sweden. If the country holds an early election, it is far from clear that the next government will be much more stable.
– It took four months to form a government after the last election and forming a new one will not be an easy task, says Daniel Bergvall, economist at SEB. “An extra election will most likely not create a clear result either.”
—With the help of Anton Wilen and Love Liman.
More must-read stories from TIME