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Sweden Government Short of Majority After Final Count

Sept. 23 (Bloomberg) -- Sweden’s government failed to secure a majority, the Election Authority said after it completed a second count of all votes.

Prime Minister Fredrik Reinfeldt’s four-party coalition will have 173 lawmakers in the 349-seat assembly after the Sept. 19 election, two short of a majority and five less than it had after the 2006 vote, the Stockholm-based authority said on its website today. The opposition will have 156 lawmakers, while the anti-immigration Sweden Democrats will get 20 seats in the legislature. Turnout was 84.6 percent.

Reinfeldt will rely on support outside his coalition to pass some bills, though budget laws can only be blocked if a majority provides an alternative proposal. Sweden has been ruled by minority governments since the current one-chamber parliamentary system was introduced in 1971, with the exception of six years of majority coalitions starting in 1976, and the last four years under Reinfeldt.

There will be “negotiations and compromises on issues outside the budget and there the government may run into problems,” said Jonas Hinnfors, a political science professor at Gothenburg University.

The krona slipped 0.4 percent against the euro to trade at 9.2185 at 2:43 p.m. in Stockholm. Against the dollar, the

The government has said it may seek a collaboration with opposition parties the Greens and the Social Democrats. Parliament reconvenes on Oct. 5.

Send Out Feelers

“Reinfeldt will send out feelers about a semi-permanent cooperation with the Green party, even though I don’t think he’ll invite them into government,” Hinnfors said. Should the Green Party refuse to work with the government, Reinfeldt will rule “with jumping majorities on individual issues, which is how the Social Democrats ruled the country for decades.”

That will probably reduce the clout of the Sweden Democrats, which campaigned on a pledge to try to reduce immigration by as much as 90 percent. The party won seats in parliament for the first time since being formed in 1988, making it a potential kingmaker.

“Our ambition is to work in parliament for increased cooperation with the Green party,” Reinfeldt said at a press conference on Sept. 20. “I can also see several issues where traditionally the government and the Social Democrats have been in agreement and could be so on many issues in the future.”

Economic Rebound

Reinfeldt presided over the biggest economic rebound in the European Union, cutting taxes and running the EU’s narrowest budget deficit. Sweden’s $430 billion economy will expand 4.5 percent this year, the best performance in the 27-member EU, recouping most of last year’s 5.1 percent decline, the Finance Ministry said on Aug. 20.

The government, which pushed through 70 billion kronor ($10 billion) in income-tax cuts in its first four-year term, plans to cut taxes on incomes and pensions by a further 25 billion kronor through 2014. The last four years of income-tax cuts were equivalent to 2.3 percent of gross domestic product.

Besides its anti-immigration stance, the Sweden Democrats want to raise spending on elderly care, jobless benefits, longer prison sentences and introduce compulsory military conscription.

“The other parties have warned of this situation and warned that we will create problems,” Jimmie Aakesson, Sweden Democrat leader, told supporters on election night. “My promise to the Swedish people is that we will not create problems, we will take responsibility for Sweden.”

To contact the reporter on this story: Johan Carlstrom in Stockholm at jcarlstrom@bloomberg.net.

To contact the editor responsible for this story: Tasneem Brogger at tbrogger@bloomberg.net

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