A Guide to What May Be the Most Tumultuous Swedish Election Yet

(Bloomberg) -- The general election on Sept. 9 could rewrite Sweden’s political rule book.

That’s because of the rise of the Sweden Democrats, a nationalist party that has its roots in the country’s white supremacy movement. Despite being ostracized by the mainstream parties, the group’s message of stopping immigration has resonated with voters after a record inflow of foreigners over the past few years.

Polls show that the party will need to be catered to by whatever minority coalition attempts to form a government after the election. If it becomes the biggest party, Sweden will find itself in a totally new situation.

The most obvious outcome is some form of minority government led by the Social Democrats or the conservative Moderates. In Sweden, a prime minister can be approved by parliament as long as a majority of lawmakers doesn’t vote against them.

Given the uncertainties, here’s a guide to the possible government configurations that might assume office after the vote:

Lofven II

A Guide to What May Be the Most Tumultuous Swedish Election Yet

Outgoing Social Democrat Prime Minister Stefan Lofven heads a minority center-left government together with the Greens, backed by the Left Party. Although the Social Democrats are still topping the polls, both government parties have lost support since the 2014 election, reducing the likelihood that they might win another mandate.

A Guide to What May Be the Most Tumultuous Swedish Election Yet

Should they nevertheless manage to form a government, expect a third attempt from the Social Democrats to introduce a tax on banks’ operations, as well as higher capital taxes for the richest Swedes. The Social Democrats have also vowed to introduce an extra week off for parents, raise spending on welfare and lower taxes on pensions.

Alliance Cabinet

A Guide to What May Be the Most Tumultuous Swedish Election Yet

Moderate Party leader Ulf Kristersson is the candidate for prime minister for the Alliance, the center-right party bloc currently in opposition. But the Alliance parties, which plan to form a minority government, can do so only if the Sweden Democrats don’t vote against them.

A Guide to What May Be the Most Tumultuous Swedish Election Yet

Should Kristersson and the Alliance succeed, income taxes will be lowered, spending on defense and police will be raised considerably, and they will aim to bring Sweden even closer to NATO.

Moderates Cabinet

The Alliance has been under some pressure due to contrasting views on the Sweden Democrats. The Liberals and the Center Party are against forming a government if it’s the smaller bloc and would have to rely on the external support of the Sweden Democrats. Depending on the election results, Kristersson may therefore attempt to go it alone. For this scenario to work, he would need to rely on the external support of the nationalists, and would try to build majorities with different parties on different issues.

A Guide to What May Be the Most Tumultuous Swedish Election Yet

A Moderates-led government would be stricter on crime and immigration than an Alliance government. The party has also promised cuts in social benefits in order to make working more attractive.

Social Democrats-Led Cabinet

If forming a minority government proves too difficult, Lofven might attempt to cobble together a broad coalition. The most likely candidates to join such a configuration are the Green Party, the Center Party and the Liberals, perhaps also supported by the Left Party.

A Guide to What May Be the Most Tumultuous Swedish Election Yet

Such a configuration would most likely be less strict on immigration and spend more on measures to protect the environment. On the fiscal front, it would have to find a way of reconciling the center-right’s aim of lowering income tax and the left’s view that taxes on capital should be raised.

Grand Coalition

One of the least likely scenarios would see the two biggest mainstream parties get together in a German-style grand coalition. Both Lofven and Kristersson have publicly ruled out this option, but electoral arithmetic may eventually force them to think again.

A Guide to What May Be the Most Tumultuous Swedish Election Yet

In this case, expect a tightening of immigration policies and more spending on the police, defense and welfare.

What Next?

It’s far from certain that a clear winner will emerge on Sept. 9. If Lofven doesn’t resign, he will face a confidence vote two weeks after the election.

He’ll have to resign if a majority votes against him. In that scenario, the speaker will need to present a new potential prime minister and government, and a vote will be held in parliament.

Historically, the speaker has never had to present more than one government alternative, the first proposal has always been accepted. Parties have a maximum of four attempts to form a government, otherwise a new election will be held within three months.

A new government, or a Lofven II-cabinet, will need to present a 2019 budget to parliament within three weeks of assuming office, November 15 at the latest. A budget vote will be held in December.

©2018 Bloomberg L.P.