Sweden PM Fights for Survival as Political ‘Crisis’ Declared

Sweden’s prime minister, Stefan Lofven, blamed the opposition for dragging his country into a “parliamentary crisis” as he battles an onslaught from parties to the right and left united in their bid to topple him.

Lofven’s minority coalition, formed after an inconclusive election result in 2018, faces its most serious threat yet after four parties across the political spectrum agreed to back a no-confidence motion against the premier over his plans to deregulate rental housing.

“In a situation when we still are in a pandemic, to throw the country into a parliamentary crisis -- that’s not responsible,” Lofven said at a press conference in Stockholm late on Thursday.

Sweden PM Fights for Survival as Political ‘Crisis’ Declared

The dispute centers on plans by Lofven’s Social Democrats to let landlords charge market rates for new rental apartments. The Left Party, having long pledged to fight the proposal, on Thursday found itself in an unlikely alliance with the Moderates, the Christian Democrats and the anti-immigration Sweden Democrats.

The Left says the proposal lets down the tenants the government should be protecting. The other parties, meanwhile, are just eager to see Lofven go, even though they’d traditionally embrace deregulation.

Lofven’s Options

A no confidence motion formally put forward by the Sweden Democrats is now set to be held on June 21. If successful, it would topple the coalition of Social Democrats and Greens that’s ruled for 2 1/2 years with the support of two center-right parties. From the get-go, the alliance has been an uneasy one, and analysts say it may now have reached its limits.

“This is serious and there is a large probability that the no confidence vote will be passed,” said Jenny Madestam, an associate professor of political science at the Swedish Defense University.

But rather than lose a no-confidence vote, the prime minister might opt for snap elections, she said. “Stefan Lofven hasn’t shied away from announcing an extra election before...so it wouldn’t surprise me if he fights fire with fire.”

Speaking at a news conference in Stockholm, Lofven said he would have a week to call an early election, if he loses the confidence vote. He also said he doesn’t intend to negotiate with the Left Party “on the side,” and underpinned his intention to move ahead with a reform of Sweden’s rental market.

What Bloomberg Economics Says...

“There’s likely to be a period of political instability ahead. Neither a Sweden Democrat-backed bloc nor the center-left group headed by Lofven’s Social Democrats have enough support in parliament or in the polls to form a majority government. We don’t expect the increased political uncertainty to alter the economic outlook and there’s widespread support across the political divide for Sweden’s prudent fiscal policy.”

--Johanna Jeansson, Nordic economist

Some analysts suggest Lofven might yet be able to settle the dispute through weekend negotiations. But his options are limited as his coalition relies on the continued support of the Left, which is pro-regulation, and of a more center-right faction that wants deregulation.

Finance Minister Magdalena Andersson, speaking to reporters ahead of the EU’s Economic and Financial Affairs Council meeting in Luxembourg, said the government is in continuous contact with various parties, and will work hard over the weekend to resolve the disagreement.

“It’s a very serious situation,” Andersson said. “We’re in the middle of a pandemic, and we have the deepest economic crisis since World War II, so the last thing Sweden needs is a political crisis on top of that. Everyone now needs to take a step back and think about how we can act in the best possible way for our country.”

Ultimately, the latest development shows how frayed Swedish politics have become since the rise of the Sweden Democrats prevented the country’s traditional blocs from forming their own majorities. The party, whose main policy goal is to fight immigration, holds just under one-fifth of the seats in the country’s parliament.

©2021 Bloomberg L.P.

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