Upside down Europe

With politics heating up in the frigid Swedish winter we can’t help but get the sense that Europe is turning itself on its head a bit…

North becoming South?

• We warned yesterday that the Swedish government was on the brink of collapse. So it has proved. The Swedish Prime Minister Stefan Löfven today announced snap elections for the 22 March 2015 after the Swedish Parliament refused to back the government’s budget and instead voted for the opposition’s budget. This was largely down to the Sweden Democrats who are playing king-makers in the current parliament. Such political turmoil is alien to the usually placid Swedish political scene and rings more of happenings in struggling Eurozone countries unable to agree on an austerity budget in the midst of a severe economic crisis.

• Similarly, at the start of the year, the Danish coalition government was weakened by the departure of the Socialist People’s Party (SF) – which was not happy about the sale of part of state energy firm Dong to Goldman Sachs. However, the party said it would continue to support the government from the opposition benches. The move forced Prime Minister Helle Thorning-Schmidt into the seventh cabinet reshuffle since she took office in October 2011. The next general election is due in September 2015, and we wouldn’t be surprised to see the Danish People’s Party become the effective powerbroker – similar to the SD in Sweden – especially after they became the largest party at the European elections earlier this year.

• We have also noted numerous times (see here and here) that the Finnish economy is struggling and posting some of the worst growth figures in the EU. While it is stabilising now it is finding it hard to source new drivers of economic growth following the decline of Nokia, the tech sector more broadly and the paper industry. The long term economic malaise is surprising in a country which continuously ranks high in measures of competitiveness (4th globally according to the World Economic Forum) and ease of doing business (9th globally according to the World Bank).

South becoming North?

• In the third quarter of this year two of the strongest growing economies in the Eurozone were Spain and Greece. While countries such as Germany, the Netherlands and Belgium barely pulling themselves into positive growth territory the two periphery stalwarts posted some strong figures.

• Throughout this year we’ve also seen numerous periphery countries getting close to record low borrowing costs, including Ireland, Italy, Spain and Portugal.

• Discussion over the US-EU free trade deal TTIP have exposed some unusual fault lines. With countries such as Portugal and Italy pushing strongly for the deal to be struck and talking in very free trade terms, Germany and France have been raising concerns and taking a more protectionist stance.

Although thinking about it, we still have a looming economic and political crisis in Greece, economic malaise in Portugal and Italy and the rise of numerous populist parties. Maybe rather than the North and the South switching, the whole of Europe is just becoming more Southern…

Trouble in (the Guardian's) Paradise: anti-immigration party could bring Swedish government down

Jimmie Åkesson is off sick but his party could cause trouble 

UPDATE (16:30): Anti-immigration Sweden Democrats have just announced that they will vote against the government's draft budget for 2015 and support the opposition's budget instead.

As things stand (see our original blog post below), this means the Swedish government would fail to have its budget approved by parliament - and would therefore have to resign.

However, it is still possible for Swedish Prime Minister Löfven to buy himself some time and send the draft budget back to the Swedish parliament's Finance Committee - so they can work on a compromise proposal that can draw support from at least part of the opposition.

We will keep updating this blog post as news from Sweden comes in.
   
ORIGINAL BLOG POST (13:10):

As we’ve noted repeatedly, one of the main themes in European politics these days is vulnerable governments trying to fend off insurgents coming from either side of the political spectrum. Spain, Greece, France, Denmark, Italy, the UK and the Netherlands all suffer from it, albeit at different levels of intensity.

The latest victim: Sweden. The country’s anti-immigration party, the Sweden Democrats (Sverigedemokraterna, SD) has gone from 2.8% in the general election eight years ago to 12.9% in this year’s vote. It now holds the third most seats in the country’s Parliament, the Riksdag. As things stand, the centre-left coalition government - the Social Democrats and the Greens - holds 138 of 349 seats. They can draw support from another 21 Left MPs in parliamentary votes - which gives a total of 159 seats. The centre-right opposition (consisting of four parties) has 141 seats. This means that, even with the help of the Left party, the government can’t muster a majority. This leaves the SD - and its 49 MPs - as the undisputed kingmaker in Swedish politics.

This dynamic now risks bringing down the Swedish government in a rather spectacular fashion. Tomorrow, the Riksdag is due to vote on the new government’s proposed budget for 2015. As is the practice in Swedish politics, the opposition has tabled a counter-proposal (a 'shadow budget', if you like) which, were things to follow the tradition, it will vote for. Therefore, none of the blocks has an automatic majority - meaning that all eyes are on the SD.

The budget vote is a de facto vote of confidence. Prime Minister Stefan Löfven has made it clear that he will resign if he fails to get the government's budget through. The SD are currently weighing up their options. If they decide to back the opposition's budget, they will effectively be forcing the government out.

So what will happen? It’s hard to tell at the moment, but here are a few possible outcomes:

• The SD decide to abstain, meaning that the government's budget will pass with a relative majority. 

• The SD announce their intention to vote for the opposition's budget. The government postpones the vote and sends the draft budget back to the Swedish parliament's Finance Committee in a bid to come up with a new proposal that can draw support from the centre-right opposition.

• The SD decide to vote for the opposition's budget but, in an unprecedented move, the opposition votes with the government and the government's budget goes through.  

• The SD decide to vote for the opposition's budget and the opposition's budget goes through - leading to Prime Minister Löfven resigning after only two months in office and, potentially, to snap elections.

In other words, an almighty mess. Swedish politics have simultaneously become Italian (turbulence) and Dutch (fragmentation of the centre). Such dynamic was unthinkable only a few years ago.

Löfven’s greatest hope is that the SD blink. Bringing down a government and triggering a snap election is far from a risk-free strategy. In 2012, Geert Wilders and his Freedom Party withdrew support from the minority centre-right Dutch government in a budget vote. In the subsequent snap elections, Wilders got absolutely hammered and his party’s share of the vote was halved. He had over-reached and Dutch voters disapproved of what they saw as reckless behaviour.

Also, do the SD have the energy and financial power to fight another election? Quite literally: the party's leader, the scarily able Jimmie Åkesson (in the picture), has taken indefinite sick leave due to exhaustion. The SD would potentially have to fight a new election without its greatest asset.

As our Director Mats Persson argued in the Telegraph last week, it’s interesting to note the diametrically opposite approaches in the UK and Sweden in response to insurgent parties. In the former, it’s been a case of out-Ukipping UKIP - at least up until Cameron’s immigration speech last week, in which he drew a clear line in the sand. In the latter, it’s been a case of ignoring and seeking to humiliate SD - fuelled by a media seeing itself as the guardian of Swedish tolerance. Neither approach has worked.

This is part of a very complex discussion of course. But ahead of tomorrow’s vote, Swedish politicians and commentators would do well in thinking about how they reached a point where an anti-immigration party with neo-fascist roots became so powerful that it can take governments down?

At least Swedish politics is no longer un-exciting.

The Swedish election results may be a net neutral for Cameron’s EU renegotiation plans

The Swedish election results were a mess. The Social Democrats and two other opposition parties, the Greens and Left, garnered 43.7% of the vote, against 39.1% for the sitting centre-right Coalition. The anti-immigration Sweden Democrats won 13% of the vote, up from 5.7% in 2010. The leader of the Social Democrats as well as two minor centre-right parties have ruled out a grand coalition, meaning that the most likely outcome is a fragile, minority centre-left government.

There’s a lot one can say about the result. Without a doubt, the big story is the rise of the Sweden Democrats. It’s fair to say that Swedish media and politicians are this morning pretty much panicking, at the prospect of SD holding the balance of power – despite an absolutely massive media campaign against the party leading up to the elections. As expected, all seven mainstream parties have declared that they won’t deal with the Sweden Democrats but, with the party now controlling 49 out of 349 seats in the Riksdag, is this sustainable? And will it hurt or help SD in future? The metropolitan elite ganging up on SD hasn’t worked well so far. In several Councils in southern Sweden, SD won around 30% of the vote, which is concerning.

Some UK media has gone with the headline “Cameron has lost a key EU ally”. Others have argued that the leftist shift in Sweden has further undermined Cameron’s prospects for renegotiation. This is not quite telling the full story. As a whole, a centre-left government including the Greens, drawing on support from the Far Left – two parties that up until recently opposed Swedish EU membership – may in fact become more Eurosceptic. Swedish unions, at least on a membership level, are a hotbed for euroscepticism. On the euro, the Left is much more sceptical than the right. Though the euro debate is dead, this matters politically as the less Sweden perceives itself as a “pre-in” (remember, Sweden doesn’t have a legal opt-out from the euro), the more sympathetic it might be to UK objectives to define the EU as a club beyond the euro. Remember, Moderaterna still had people like Carl Bildt who recently said that Sweden should and will join the euro. On issues like the EU budget, democracy and transparency a centre-left government will be just as helpful as the Reindfeldt government.

Still, a centre-left government might be less keen on free trade and dynamic financial markets, though in truth, any Swedish minority government would and will have to work hard to get through an ambitious services directive for example. And by simply belonging to a political family, the willingness to strike deals may be tempered. Also, Reinfeldt and Cameron did get along on a personal level, though that relationship was strained recently (as it became between Anders Borg and George Osborne).

Instead. the significance of the Swedish elections was the fragmentation of the centre, and the rise of an anti-establishment party, that the mainstream still has no convincing answers to. In that sense, Sweden just became a bit more European – and we don’t mean that in a good way in this instance.

Sweden set for a lurch to the left - and further gains for anti-immigration party

The Swedish elections take place on 14 September. As polls stand, the sitting centre-right coalition government, "Alliansen" - the Moderates, Centre Party, People's Party and Christian Democrats - look set to lose to a leftist coalition of some sort. The big question might be who the Social Democrats - the biggest party in the polls - decide to rule with: the Green Party is the most likely partner, but the Left Party could be in the mix too.

There's even talk of the Social Democrats reaching across the aisle to form some sort of 'grand coalition' - which would break with tradition. It may not be that easy for the Social Democrats to agree economic policy with the Greens and Far Left, both of which are, well, pretty far to the left. In the latest Ipsos poll, the three left parties together muster 50.4%, whilst Alliansen is on only on 35.6%.

A poll of polls for daily Expressen has a slightly stronger showing for the centre-right but the broad picture remains the same: absent an upset, Sweden looks set for a centre-left government following eight years of centre-right rule.

At the same time, the anti-immigration Sweden Democrats have gained steadily in the polls, and it is now the fourth most popular party in the country on 10.3% (it made the Parliament for the first time in 2010, on 5.7%) according to the poll of polls - breathing down the neck of the Greens, on 10.8%. This despite Swedish media really having turned up the heat on the party over the last few years - often deserved but at times hysterically and counter-productively (the Swedish establishment hasn't quite yet grasped the 'metropolitan elite is ganging up on us' narrative that is doing so much for anti-establishment parties across Europe).

That's worrying news for those of us who want Sweden to remain a liberal and outward-looking country.