The political consensus that enabled Prime Minister Carl Bildt's center-right government to begin dismantling the welfare state is breaking down. Amid a deepening recession, the opposition Social Democrats blocked Bildt's efforts to cut sick pay and raise pension contributions in late November. That prompted a currency crisis, forced a devaluation of the krona, and raised doubts about Bildt's own future. To hang on to office and block the Social Democrats' claim for a share of power in a new coalition, Bildt will have to shelve further social cuts. He may even be forced to boost spending on such measures as job retraining.

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