Nordea Dons `Tinfoil Hat' to Decipher Swedish Political Deadlock

(Bloomberg) -- Sweden’s political parties may simply not have enough money for another election.

That could be the reason that the talks on finding a new government two months after the inconclusive election are going so slowly, Nordea economist Martin Enlund speculates in what he admits might be some “tinfoil hat” analysis. It could better if a new vote were to coincide with the elections to the European parliament in May, he says.

”A tinfoil hat idea, perhaps, but it would indicate that the process could last until February 2019 when the speaker then gives up and announces an extra election,” he said. A new vote needs to happen three months after the speaker calls it.

Offbeat analysis is perhaps to be expected as Sweden finds itself in uncharted political territory. Talks on forming a new government have reached a record length after September’s general election.

Next week should also prove tumultuous when parliament will vote on whether to name opposition leader Ulf Kristersson as new prime minister. He looks unlikely to win and parliament will likely go through more rounds of votes (four need to happen before there’s a new election.)

The markets have shrugged off the election, but should Kristersson “against the odds” win it could give a bump to the krona, Enlund wrote in the bank’s Week Ahead report on Friday.

©2018 Bloomberg L.P.