Prime Minister Stefan Löfven had made it clear that should his government lose the vote in parliament on
the State Budget Bill, then he was not prepared to rule on someone else’s budget. This was new, since he
already twice before, in 2014 and 2018, had lost budget votes and still not resigned. Instead, he had
chosen to remain in office and govern on the opposition’s budget.
To complicate things, the Centre Party refuses to support any State Budget Bill negotiated with the Left
Party, no matter its content or policy proposals. They claim that the government is free to negotiate with
anyone, but the Centre Party will not support any budget negotiated with the wrong party. The red-green
government was and is left with a dilemma, since it must gather support from both the Centre Party and
the Left Party to see its state budget bill passed. It is a very hard task, indeed.
The Left Party has therefore presented its demands to consider supporting the government’s budget proposal in a newspaper article, claiming that the government now knows what to do without negotiations. The measures proposed were generally not very appealing to the Centre Party.
Four demands were made by the Left Party for it to consider accepting the Budget Bill: Any tax cut must be matched with equally large tax increases, public spending should be increased by financial support to regions and municipalities, measures to increase economic equality must be introduced and, fourthly, proposals and spending regarding climate change and jobs need to be included.
Thus, the government must form the State Budget Bill without talking to one of the parties which support it needs for the Budget vote. If it listens too well, then the Centre Party will reject the Budget and just support its own budget proposal.
It is clear that the red-green government was and is facing a very real risk of losing the vote on the State Budget in November. That would be a unique third budget vote loss for a Prime Minister also being the first to be voted out of office by parliament. The Prime Minister was caught between a rock and a hard place, with no obvious way out. The end of the road was approaching.
A guess is that the Social Democratic Party will use the opportunity to increase the redistribution aspects of the State Budget and increase public spending by financially supporting regions and municipalities, in order to gain leverage prior to the September 2022 general election.
Another assumption of ours is that the government will push for tax increases on what it will brand “rich people”, by at least talking about reintroducing taxation of property, wealth tax and inheritance tax. It could well be that increased income tax on higher end wages will be demanded, but not implemented before the election.
A new Party Leader will have very little time to negotiate support for the budget or to put her or his own mark on the State Budget Bill, even if swiftly confirmed by parliament. But a new Party Leader will need to renew the party’s policy and messaging prior to the election.
For the Centre Party to get any tax cuts accepted, it will be forced to accept increased taxation as well, which could mean increased climate related taxation, since that is the request of the Green Party. If the Centre Party and the Left Party refuse to accept this, then the Social Democratic Party is handed a number of election campaign issues.
Should these rocky waters not have been properly navigated by the red-green government, then it would have fallen again this autumn. Now, it is clear that it will resign in November, anyway.
It would appear to be the most difficult timing possible for the party to change leader and try to retain the Prime Minister position. It would be more understandable if the Prime Minister had already accepted that the government would have had to resign in November anyway, after losing the State Budget vote. These types of situations have their own dynamics, still the actions of the opposition remain to be seen.