sweden 2018 election - reaction
table top
STOCKHOLM FACES DEADLOCK, MORE FAR-RIGHT INFLUENCE

Monday, 10 September 2018

 

The results of Sunday’s Swedish election still weren’t final Monday morning, but the latest tally indicated that the kingdom faced the possibilities of extended political uncertainty and even a new election.

 

With just two of the country’s 6000-odd districts yet to report, the current government’s weakened centre-left bloc had a one-seat lead over the opposition centre-right alliance in the Riksdag, the Swedish house of parliament. Neither bloc garnered a majority, but a minority government has been running the country since the 2014 election.

 

The Social Democrats, the biggest party in the current administration, have been confronted with their worst performance in more than a century after securing only 28.4pct of the vote. Prime Minister Stefan Löfven rebuffed calls for his resignation, saying he will remain in office.

 

Löfven said, “The voters have made their choice, now it's up to all of us decent parties to wait for the final result and then negotiate (and) cooperate to move Sweden forward in a responsible way." The prime minister also suggested the possibility of working with centre-right parties in a "cross-bloc cooperation."

 

The next session of the Riksdag is scheduled to begin on 24 September with the selection process for prime minister.

 

The leading centre-right party, the Moderates, also lost ground with a result of 19.8pct. Analysts suggest that due to the virtual tie between the kingdom’s two centrist factions, Moderate party leader Ulf Kristersson has become a viable candidate for prime minister, which further muddles the kingdom’s political future.

 

The far-right Sweden Democrats added seats, enough to push either the right or left bloc into majority territory. However, the seven other parties represented in the Riksdag have repeatedly distanced themselves from the anti-migrant, anti-EU platform of what has become the third most popular party in the country.

 

Despite significant gains, the Sweden Democrats failed to live up to the pre-election hype and polls predicting they would receive 20pct of the vote. The party won 17.6pct, which was still up from their showing of nearly 12pct in 2014.

 

The krona spiked against both the dollar and the euro overnight before falling as the trading session lengthened. In mid-morning trade, USD/SEK was down around 0.2pct, but EUR/SEK was nearly 0.1pct higher.

POLITICS COULD DRIVE SEK MOVES
The krona took a number of hits during the political wrangling after the last Swedish election.
The krona took a number of hits during the political wrangling after the last Swedish election.

 

Sweden faces weeks or even months of political uncertainty as the kingdom’s politicians grapple with the daunting task of electing a prime minister on 24 September under penalty of new elections. If a government is formed, it will be expected to pass a budget by year’s end.

 

Going forward, it’s all about politics, according to Danske Bank. “We expect continued politics-related volatility in the SEK in the weeks to come,” especially with the number of current unknowns and the Sweden Democrat’s strong bargaining power.

 

“The main focus for markets and especially the SEK is not the economy, given Sweden’s strong fundamental backdrop with solid public finances.”

 

Due to the Sunday losses by leading parties on the centre left and right, the pre-election expectations of a weak minority government in Stockholm have become even more likely, Danske Bank said.

 

“A weak government will be highly dependent on the Sweden Democrats and ad hoc majorities. It could fall at any time.”

 

Eric Culp, LiveSquawk News - Frankfurt

>>>READ OUR PREVIEW HERE

table bottom