Swedes Sink Into the Unknown as They End 2018 With No Government

(Bloomberg) -- Never before have Swedes gone this long without a formal government.

Since an election on Sept. 9 failed to produce a clear winner, the country’s top politicians have been unable to reach any agreement on a viable coalition. Now, the question is whether new talks in the coming weeks will be any more successful. Otherwise, Sweden will be heading toward another election.

After talking to the top party leaders on the last working day of 2018, the speaker of parliament underscored his demand that a new government must be formed by Jan. 23. Failing that, Swedes will be sent back to the ballot box. The speaker, Andreas Norlen, has already characterized that outcome as a “big failure” that would damage Sweden’s democracy.

Behind the stalemate is the popularity of the nationalist Sweden Democrats. The Party, which has neo-Nazi roots and has flirted with the idea of ripping Sweden out of the European Union, secured almost a fifth of the vote in September. And because neither of the two established political blocs wants to work with the Sweden Democrats, no one seems able to figure out how to get enough seats in parliament to govern.

Stefan Lofven, a former union boss who has been prime minister of a Social Democrat-led coalition since 2014, has refused to offer support to a bloc that would be led by his main rival, opposition leader Ulf Kristersson. But Kristersson seems unable to scrape together a government without help from Lofven’s bloc.

Meanwhile, polls suggest the Sweden Democrats have only gained in popularity since the September election.

The only way forward now is if one or more of the political parties “gives up on their core political issues to bridge the large gap between them,” SEB, one of Sweden’s biggest banks, said in a report on Dec. 28.

The development is highly unusual for Sweden, which is generally known for its political stability and where governments have tended to be formed less than a week after an election.

For now, the markets have handled the impasse with equanimity. SEB says even a snap election would probably have “a limited impact.”

Party leaders also appear calm. A Bloomberg reporter saw Center Party leader Annie Loof boarding a plane to the Canary Islands early on Friday, while Christian Democrat leader Ebba Busch Thor is posting pictures of her cat and her child on Instagram, as she thanks voters for their support.

To contact the reporter on this story: Rafaela Lindeberg in Stockholm at rlindeberg@bloomberg.net

To contact the editors responsible for this story: Jonas Bergman at jbergman@bloomberg.net, Tasneem Hanfi Brögger

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