Sweden May Now Face Budget Fight as Government Talks Drag On

(Bloomberg) -- Sweden could face a whole new crisis in a month, if it can’t agree on a government.

The country is running up against a deadline on Nov. 15, when a spending plan for 2019 will need to presented no matter if a new government is in place or not. Parliament will also need to vote on a budget for next year in December.

Acting Prime Minister Stefan Lofven is currently staying on with his Social Democratic-led coalition as a care-taker government. Custom is that the care-taker government presents a politically neutral budget, but now some in the Conservative-led opposition are mulling whether to try to push through a separate spending plan.

That is raising alarm bells in Lofven’s Left-green bloc. Jonas Sjostedt, the leader of the Left Party, a group that supports the acting government of the Social Democrats and Greens, said it would be “unwise” to propose alternative budgets.

“In this kind of unclear situation it would make the government formation process more difficult,” Sjostedt said in an interview in parliament this week.

The opposition parties, with the help of the nationalist Sweden Democrats, could push through a spending plan since they control a majority of the votes. They already voted to oust Lofven last month and also decided on a new speaker together.

The acting government is preparing for all different eventualities.

“The Finance Ministry is preparing the infrastructure for all scenarios that may arise including if a new government quickly needs to put together a budget, or if the government process is delayed and there’s a need for the acting government to present a transition budget,” Gosta Brunnander, a spokesman for acting Finance Minister Magdalena Andersson.

What an acting government is allowed to include in a transition budget is touched on in a government memo from 1990, “A transitional government’s powers.”

“In the case of a very outdrawn government shift, a transitional government may need to present a budget proposal, and probably also a proposal for changes of the current year’s budget, to parliament,” it says in the memo. Such a budget bill should “not contain proposals that have a clear party political orientation.”

With almost a month left until the budget deadline and government talks in full swing, the opposition Alliance parties are so far quiet on the budget process.

A joint opposition budget is unlikely since the Center Party and the Liberals have said that they don’t want to form a government or present budgets that rely on the support from the Sweden Democrats. But a budget presented only by the Moderates still has the potential to win if the Christian Democrats and the Sweden Democrats vote for it, as long as the Center party and Liberals don’t vote against it.

©2018 Bloomberg L.P.