An intense election campaign defined the months leading up to the 2014 general election, on Sunday 14th September. Sweden’s incumbent Prime Minister Fredrik Reinfeldt, leader of the Conservative Party has resigned, as the centre-left coalition surpassed the centre-right coalition. The leader of the Social Democratic party, Stefan Löfven, will be asked to form the new government, but lacks the majority vote in parliament and will be forced to reach out across coalition lines in order to govern the country efficiently. However, statements on election night by the centre and liberal party leaders indicate that such cooperation will not come easy. www.brunswickgroup.com/publications/reports/

1. Brunswick Group
15 September 2014
Talking Politics
Time to put party interests aside?
An intense election campaign defined the months leading up to the 2014 general election, on Sunday 14th September. Sweden’s incumbent Prime Minister Fredrik Reinfeldt, leader of the Conservative Party has resigned, as the centre-left coalition surpassed the centre-right coalition. The leader of the Social Democratic party, Stefan Löfven, will be asked to form the new government, but lacks the majority vote in parliament and will be forced to reach out across coalition lines in order to govern the country efficiently. However, statements on election night by the centre and liberal party leaders indicate that such cooperation will not come easy.
Despite two terms of economic stability and a positive development of state finances, the centre-right alliance failed both in capitalising on the stability and in fending off the swing towards the left in the election campaign, where the public agenda shifted from focusing on jobs and the economy to focusing on education and reform in the public sector. The Conservatives dropped almost 7 percentage points, while the Social Democrats remained on the same levels as after the 2010 election. The right-wing populist party the Sweden Democrats went from 5.7% in the 2010 election, to becoming Sweden’s third biggest party in this election, with which no other parties are prepared to cooperate.
23.20%
4.60%
5.40%
6.10%
6.80%
31.20%
5.70%
12.90%
4%
Election results 2014
The Conservative Party (Moderaterna)
The Christian Democrats (Kristdemokraterna)
The Liberal Party (Folkpartiet)
The Centre Party (Centerpartiet)
The Green Party (Miljöpartiet)
The Social Democrats (Socialdemokraterna)
The Left Party (Vänsterpartiet)
The Sweden Democrats (Sverigedemokraterna)
Others
Swedish General Election 2014
Key take-aways
 Incumbent centre-right coalition resigns.
 Right-wing populist party Sweden Democrats hold the swing vote.
 Social Democrats will try to form a government based on a centre-left minority but need a cross-coalition cooperation in order to succeed, and to keep Sweden Democrats influence to a minimum.
 Stefan Löfven, leader of the Social Democratic Party, has reached out to the centre and liberal parties, asking them to put party interests aside to be able to form a government and get a budget passed, but so far reactions are negative.
 Even if a centre-left budget passes, given the minority position of the centre-left coalition – each political initiative will result in very complicated negotiations involving at least five parties.
Next steps…
 Forming the government, which will be complicated. If parliament rejects the suggestion for Prime Minister – through a vote which can take place on 2nd October at the earliest – the Speaker will pursue the matter once more. The parliament can reject four suggestions for Prime Minister from the Speaker, before a new election has to be announced. It is unprecedented in Sweden for the parliament to reject the suggestion from the Speaker.
 Passing the budget. With the Sweden Democrats holding the swing vote, they can vote for a Conservative budget and thereby invalidate the newly formed government together with its budget. The risk of this actually happening is fairly slim and the most probable turn of events is that the Sweden Democrats refrain from voting on the budget, leading to a parliamentary approval of the centre-left budget. If the new government’s budget does not pass, the task again lies with the Speaker to suggest a new Prime Minister with the responsibility to form a government.

2. Even if a centre-left budget passes, given the minority position of the centre-left coalition – each political initiative will result very complicated negotiations involving at least five parties.
What happened?
The preliminary results indicated early on that a change of power was at hand. The centre-left coalition took the lead and the centre- right alliance had to admit defeat. Fredrik Reinfeldt announced on election night that he would not only resign as Prime Minister, but also as leader for the Conservative party by spring. His resignation will likely create even more uncertainty in parliament in addition to creating an unclear division of power.
The Sweden Democrats went from 5.7% in the 2010 election, to Sweden’s third biggest party with 13% of the votes. This means that the Sweden Democrats will have the swing vote unless a so-called “un-holy alliance” is formed over traditional coalition lines. In his first speech on election night, Stefan Lövfen spoke of the importance of jobs, education and welfare – issues he has pursued since the beginning of the election campaign. He extended an arm to the liberals and the centre party and opened up for a potential cooperation in the hope that together they can be strong enough to counteract the Swedish Democrats’ influence over politics. This message was reiterated again the morning after the election, and Stefan Löfven was very clear in saying that cross-coalition cooperation is required going forward. The liberal and the centre party leaders, however, have both stated that they are not open to cross-coalition cooperation.
Why?
The two terms leading up to this election have seen world-wide economic crises and an escalation of conflict in many parts of the world. The centre-right coalition between the Conservatives, the liberals, the centre party and the Christian Democrats, has kept Sweden at bay from an economic crisis and Sweden has recovered well after the financial strain seen in past years. Unlike the 2010 election campaign, when the financial crisis was fresh in memory, this year´s campaign saw a lower sense of urgency for Sweden’s economy, currently one of the strongest in Europe. The centre-right coalition is now rewarded for providing stability by losing votes to both the opposition and the far-right populist party, the Sweden Democrats.
Other factors leading up to the election results include declining educational results as seen in the 2014 PISA report (OECD:s triennial international survey; Programme for International Student Assessment) where Sweden once more dropped below the OECD average, dissatisfaction with profit within welfare, and unemployment rates.
When the Sweden Democratic Party was founded 26 years ago, many of the party’s most influential members had a background in, or were at the time linked to, neo-Nazi, nationalist or racist groups – from which the party gradually distanced themselves. In the early years, the party’s doctrine was characterised by right-wing extremism but after having excluded members of the extremist and nationalist far-right end of the party, as well as electing Jimmie Åkesson as party leader, they won increasing confidence from voters and eventually entered parliament in the 2010 election. The new role of the Sweden Democrats is on par with neighbouring countries
Denmark, Finland and Norway, where the development is similar in terms of anti-immigration parties winning enough seats in parliament to be able to influence government policy.
When the current government came into power, the Conservatives had undergone a complete makeover and added a “new” in front of their party name “Moderaterna” – indicating political renewal and demarcation from the old ultra-conservative forces within the party. Their political agenda became increasingly similar to that of the Social Democratic party and this echoed well with the Swedish public. Since 2006, the centre-right coalition has increased privatisation, something that had progressed under Social Democratic rule. As a reaction to the past couple of years’ media scrutiny of private welfare companies – and the downfall of some – the public opinion on profit within welfare has become increasingly critical. The left party remains completely against profits in welfare companies and the social Democrats propagate tougher requirements and more frequent evaluation. Under a centre-left rule, the privatisation of public sector companies is likely to slow down and see tougher requirements in terms of quality and transparency.
What now?
The election results are clear – but now is where the political tug of war really begins. Given the swing vote of the Sweden Democrats, managing to form a government does not automatically mean that the new government’s budget proposition will pass. But, first things first.
Following the election, the incumbent Prime Minister, Fredrik Reinfeldt, will have to formally hand in his resignation to the Speaker of the parliament; however, he will be asked by the speaker to remain and lead a caretaker government until a new government has been formed. The Speaker conducts talks with all party leaders after which he will ask one of them to examine the different possibilities of forming a government.
A likely formation is a minority coalition between the Social Democrats and the Green Party, leaving the Left party out of the government as Stefan Löfven has extended a hand to the Green Party in terms of forming a government together. No such guarantees have been given to the Left.
This alternative does however require the Left Party to support the government without being awarded any minister posts. If the Social Democrat-Green Party coalition is to manage to leave the Left Party out of the government but still wants to receive their support in parliament – they are likely to be forced to make a big concession on one of the Left Party’s core issues.
In all parliamentary votes, a centre-left coalition requires almost 7% support from other parties in parliament, which in reality means that at least two parties have to support the government coalition – as no one of the remaining parties has 7% of the votes.
In accordance with the negative parliamentary system in Sweden, when the proposed new Prime Minister is presented to the parliament, it takes a majority of the votes to prevent him from acceding to the post. The vote in parliament for the new Prime

3. Minister can take place on 2nd October at the earliest. The most pressing issue at hand though, is that after this has been accomplished, only one giant hurdle is behind him. In the case of a change of power, the budget needs to be ready within three weeks after the new government is in place, and then voted on in parliament. In this voting, there is no need for majority but the voting is conducted according to the principle of elimination – meaning you can vote for your own party primarily, and then secondarily vote for another alternative.
The former centre-right coalition government will present a joint budget, as will the centre-left coalition. With the Sweden Democrats having the swing vote, they can vote for a Conservative budget and thereby invalidate the newly formed government together with its budget. The risk of this actually happening is fairly slim and the most probable turn of events is that the Sweden Democrats refrain from voting on the budget, leading to a parliamentary approval of the centre-left budget.
All other parties in the parliament have stated that they are not open to cooperation with the Sweden Democrats and some have said that they would rather see the before-mentioned “un-holy alliance” than any Sweden Democratic influence on important policy issues. Based on the election campaign and the speech given by Stefan Löfven on election night, the most probable coalition would be between the Social Democrats, the Green Party, the Left Party, the Liberals and the Centre Party – yielding them a majority in parliament and effectively shutting out the Sweden Democrats. There is still uncertainty in terms of the government formation and each political initiative or issue will likely result in negotiations demanding a five- party temporary coalition.
What are the implications for business?
The implications for business will not be determined until the new government is formed and the budget is approved. It is however likely that we will see unpredictability in terms of long-term governing rules for business as the three parties in the centre-left coalition differ in opinion across many issues.
One issue where there is disagreement is the level of regulation for private companies within the welfare sector. The left party wants to prohibit dividends within private welfare companies while the Social Democrats want to increase requirements of quality and control as well as instate regular evaluation. The actors within the private welfare arena thus belong to the group of companies that will be most affected by a centre-left coalition government, which include suggesting private actors sign a ten-year-ownership deal to be able to own and run publicly financed welfare services. Further measures include demanding far greater financial transparency than today.
This spring has seen a vivid discussion in media regarding Swedish industry and jobs moving abroad where production is cheaper. With a new Prime Minister with a background from the industry union, there will likely be a surge in activities for inducing the Swedish industry and creating more jobs along the way. Stefan Löfven is likely to work to keep the industry interests on the coalition government’s political agenda.
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Comparative results – 2014 vs. 2010
23.2%
6.8%
12.9%
5.7%
6.1%
5.4%
4.6%
0.0%
10.0%
20.0%
30.0%