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Sweden PM Ousted in Confidence Vote as Political Turmoil Deepens

Bloomberg logo Bloomberg 9/25/2018 Rafaela Lindeberg and Amanda Billner

Swedish Prime Minister Stefan Lofven speaks to the press after he was ousted in a vote of no-confidence in the Swedish Parliament Riksdagen on September 25, 2018 in Stockholm. © ANDERS WIKLUND/AFP/Getty Images Swedish Prime Minister Stefan Lofven speaks to the press after he was ousted in a vote of no-confidence in the Swedish Parliament Riksdagen on September 25, 2018 in Stockholm.

(Bloomberg) -- Swedish Prime Minister Stefan Lofven was voted out in a confidence vote in parliament as the center-right opposition and the nationalists joined forces to end four years of Social Democratic rule.

The vote sets up lengthy government talks. An election two weeks ago left Lofven’s coalition with a lead of just one seat over the Alliance opposition and saw the Sweden Democrats grab 62 seats in the 349-person legislature. With the nationalists as power-brokers, there’s no clear path to power for either of the two establishment blocs.

Lofven, 61, had refused to resign, pointing to his narrow lead and calling for cross-the-aisle talks to form a broad government and keep the nationalists from gaining influence.

It was the first time in history that a Swedish prime minister was ousted in a confidence vote. But Lofven remained defiant, saying there’s still a good possibility of returning to power and that he would never act as a support party for the Alliance. Such a government is also “unrealistic” since they have all vowed not to rule with support of the nationalists, he said at a press conference in parliament.

Swedish Krona Erases Gains as Parliament Ousts Prime Minister

Ulf Kristersson, leader of the largest opposition party, the Moderates, said the vote was never in doubt. “There was a clear majority that the government shouldn’t stay,” he said. “That’s the starting point. Now it’s up to the speaker to assess the options.”

Speaker Rounds

The four-party Alliance and Sweden Democrats on Monday also joined up to elect a new speaker, Andreas Norlen. Starting on Thursday, the speaker will hold talks with all the parties to gauge who will be best able to form a coalition to steer the largest Nordic economy. He said it’s important for the speaker to stand above party politics.

Part of the consideration will be if there’s enough support to pass a budget bill. “I will give that a lot of thought before a government formation," Norlen said Monday.

Lofven will remain as a caretaker prime minister until a new government is confirmed.

Right now, none of the sides have enough votes to pass a spending plan. The Alliance is split on whether to seek further support from the nationalists. The Center and Liberal parties are opposed to cooperation, while the Moderates and Christian Democrats are open to passive support.

Seeking Talks

At the same time, both the Sweden Democrats and the Social Democrats are working to split the Alliance, seeking either a smaller right-wing government or a broader bipartisan coalition. The Liberal and Center parties are pushing for an Alliance government that has backing from the Social Democrats, which Lofven rejects.

a woman holding a cell phone: Election Of Speakers To Sweden's Riksdag © Bloomberg Election Of Speakers To Sweden's Riksdag

Center Party leader Annie Loof said it’s now important to be realistic. “We must cooperate and discuss with one another,” she said. “Lofven has dedicated his whole political life to advocating for understanding over bloc lines. It’s a good opportunity to use the coming days for serious and constructive discussions.”

Swedish rules stipulate that there can be four attempts to form a government before there’s a new election. Sweden has never gone beyond round one, but that could change this time. The margin is razor thin, both sides are digging in and the Sweden Democrats has vowed that it won’t back any government without getting concessions.

The biggest Nordic lender, Nordea Bank AB, said on Tuesday that while a new election can’t be ruled out it seems “unlikely.”

“It’s still open how the new government will look like,” said Torbjorn Isaksson, chief analyst at Nordea, in a note. “But with Norlen as speaker the probability increases that the new PM will be Ulf Kristersson.”

‘No Trouble’

Sweden Democrats leader Jimmie Akesson said on Tuesday that speaker has “a very difficult job ahead of him.”

a man wearing a suit and tie: Election Of Speakers To Sweden's Riksdag © Bloomberg Election Of Speakers To Sweden's Riksdag

“I’m not here to stir up trouble,” he said after the vote on Tuesday. “I don’t think that we are going to let through a government that doesn’t have the right conditions to rule the country.”

The party has already been successful in shifting the Swedish debate, with almost all groups now advocating for stricter immigration limits and more law and order. The party saw a surge in support after Sweden was flooded by migrants during the refugee crisis over the past few years and also gained followers after the global financial crisis.

The party, which has neo-Nazi roots, has also been trying to become more palatable to the mainstream parties, kicking out its most extreme members.

Mattias Karlsson, the group leader of the Sweden Democrats, said the most important issue now will be what migration policy any potential Alliance government proposes. “It may fail already there,” he said.

Sweden needs a halt to asylum seekers, he said. The best alternative is a Moderate and Christian Democrat coalition government that is “tolerated” by us and the Center and Liberal parties, he said.

To contact the reporters on this story: Rafaela Lindeberg in Stockholm at rlindeberg@bloomberg.net;Amanda Billner in Stockholm at abillner@bloomberg.net

To contact the editors responsible for this story: Jonas Bergman at jbergman@bloomberg.net, Niklas Magnusson

©2018 Bloomberg L.P.

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