Swedish Political Brief April 2021

An All or Nothing 2022 General Election

This is Rud Pedersen’s assessment of the present political situation in Sweden. The Political Brief is an example of the analysis made available to our clients and partners on a regular basis. The product is designed to help companies and organisations to navigate and understand the political landscape.

April Takeaways

  • The likelihood of a new January Agreement-type of political deal is high after the 2022 General Election. For companies and organisations, this increases the uncertainty of what policies are to be expected from a new government. Close monitoring and analyses are needed.

  • The strategic changes of the parties’ regarding policy views and political orientation, as well as preferred political partners, comes with risks. If the changes lead them to being in government, then they will be accepted and rewarded within the parties. If not, they will be challenged and reversed, and their promoters could be replaced.

  • There are inconsistencies in the approaches of the parties. Some of the outstanding issues are intentional - the parties calculate that they are better off not answering them. Regarding some issues, the parties are politically unable to answer, since those are too politically sensitive.

  • The former basic rule of Swedish politics, to never propose unfinanced reforms, is presently void, neither followed nor demanded to be restored. The government has rejected presenting a plan to regain budgetary discipline with reference to the Corona crises.

  • The government presented its long-term infrastructure bill, with a proposed funding of SEK 876 billion, allocated to maintaining present and constructing new infrastructure. This is not assessed to be nearly enough to cover the projects planned. The bill does not point out individual construction projects or prioritise in between projects.  

  • The proposed migration law will be heavily contested in parliament, with the opposition set to see it revoked by a new government majority, it if is passed.

  • The present red-green coalition, together with the Centre Party and with support from the Left Party, gathers 50.4% of the votes and a predicted 184 seats in parliament (with 175 needed for a majority).

  • The Moderate Party and the Christian Democratic Party, supported by the Sweden Democrats, receive a combined 45%. That would equal 165 seats in parliament, while the Liberal Party would lose its representation given its present support level. Adding the Liberal Party, the four parties presently gather 48.1% support.

The winners will take it all – the losers stand to fall

The strategy changes of several parties, in themselves adaptations to a different political landscape formed by the rise of the Sweden Democrats, means that the General Election in September 2022 will be a win or leave-office election for party leaders.

Some strategic choices challenge the parties’ traditional policy views and political orientation, as well as preferred political partnerships. If these choices lead to being in government, then they will be accepted and rewarded within the parties. If they do not, they will be challenged and reversed, and their promoters will likely be replaced.

This is a reason that the election campaign can be expected to be tough and harsh. There is much at stake for party leaders, spokespersons and party secretaries, even more so than in previous general elections.

  • The Social Democratic Party has manged to break up the Alliance opposition cooperation – but the price is the sacrifice of key political priorities. The party has abolished the tax on high-end incomes and agreed to liberalise labour market law.

  • The Left Party has started to occasionally and indirectly interact with the right-wing populist Sweden Democrats, to gain political influence.

  • The Green Party’s priority to be seen as able to govern came at the price of the party giving up its position of a radical and alternative party focused on climate and environmental issues.

  • The Moderate Party lost the Alliance cooperation and has gone from refusing to cooperate with the Sweden Democrats to being prepared to base a government on a political agreement and budget cooperation with the Sweden Democrats.

  • The Christian Democratic Party has gone from being the social conscience of the non-socialistic parties to being the party opening the door for the Sweden Democrats.

  • The Liberal Party first sacrificed the Alliance cooperation due to distaste of any dependence of the Sweden Democrats and then announced its departure from the cooperation with the red-green government to foster preparedness to cooperate with the Sweden Democrats.

  • The Centre Party left the Alliance cooperation to prevent the Left Party and the Sweden Democrats from having political influence, and now claims to be open for government cooperation with both the Social Democratic Party and the Moderate Party.

  • The Sweden Democrats have moved from dismissing all other parties as establishment, to searching for an organised cooperation with the Moderate Party and the Christian Democratic party.

The party leaders have all gone all-in on their new strategies, not because those are preferred as such, but because they must create a credible or at least possible government alternative. Those losing the election will be held politically accountable. The general election next year is a one-off race for government position.

Outstanding issues regarding the formation of the next government

It will be hard to predict the political platform of a new government since it, at least to some extent, will be negotiated after the 2022 General Election. This means that the likelihood of a new January Agreement-type of political deal, like today, is high. For companies and organisations this increases the uncertainty of what policy could be expected from a new government. Close monitoring and analyses are needed.

The parties will demand political influence according to their size, but also according to how necessary their support is to the formation of a new government. A smaller party could get extra leverage should it be needed to form a majority.

At this time, there are still inconsistencies in the approach of some parties. The Liberal Party will support a Moderate Party lead government but rejects budget negotiations with the Sweden Democrats. Now, since the Sweden Democrats demand such negotiations and this has been accepted by the Moderate Party, they are likely to happen.

The Centre Party explains itself being open to be part of both a Moderate Party and a Social Democratic Party government, depending on how the Sweden Democrats can best be excluded from influence. The former call to also exclude the Left Party from influence has been downplayed. Since the Moderate Party is set on cooperation with the Sweden Democrats the Centre Party is, in practice, saying that it is open for being part of a Social Democratic Government.

It could be that the Liberal Party prefers to remain outside a Moderate Party led government, to be able to both support but also criticise such a government, needing a freer role to grow. It could also be that the Centre Party will prefer to remain outside of a future red-green government to both support, but also to criticise it when called for, in order to grow.

The Left Party has found such a dual role politically profitable, when it managed to back the red-green government in general but threaten to vote against it on selected issues. The Left Party has never been allowed in the government, something that could possibly change in 2022, at least the Moderate Party is likely to argue.

The Sweden Democrats claims to be striving to lead a new government, but adds that this will not be possible anytime soon. Instead, the party leader, Jimmie Åkesson, is interested in becoming Minister of Justice, understanding full well that the Moderate Party will not accept that. He is also calling for political influence in accordance with the size of the Sweden Democrats, but has not said if that size is to be compared with the size of the Moderate Party or to the size of a government coalition. As long as the Sweden Democrats are not part of a government, they will also be able to generally support it, but threaten to vote it out when deemed politically profitable.

Some of these outstanding issues are intentional - the parties calculate that they are better off not answering them at this time. Regarding some of the issues the parties are politically unable to answer since they are too politically sensitive.

The Spring Budget

Under normal circumstances the Spring Budget is very politically significant. It provides the government with an opportunity to alter the budget midway in the year, and also to set the long-term financial framework. This year, it was less important than usual. The reason is that the government already has put forward no less than six extra budget bills with support measures, due to the coronavirus pandemic.

Another reason for it being less politically relevant is that the Liberal Party has announced that it will be leaving the cooperation with the red-green government after the State Budget Bill for 2022, which will be delivered to parliament in September. The government will therefore be less interested in giving the Liberal Party political wins, or even sharing the political limelight with the Liberal Party, from now on. It is likely that the government will find ways to present policy initiatives other than through budget bills.

This said, the Spring Budget Bill still contained SEK 45 billion worth of reforms, to add to the SEK 400 billion in coronavirus crisis-related measures already decided. It is worth noting that the former rule of Swedish politics, to never propose unfinanced reforms, presently is absent, neither followed nor demanded to be restored. The government has rejected demands to present a plan for regaining budgetary discipline with reference to the coronavirus crises.

Bill on Infrastructure

The government has put forward its long-term infrastructure bill, with proposed funding of SEK 876 billion for the period 2022-2033, allocated to maintaining present and constructing new road and rail infrastructure.

Although this was an increase of SEK 176.5 billion, compared to the previous long-term infrastructure bill, it is not assessed to be nearly enough to cover the projects planned. The bill does not point out individual construction projects or prioritise in between projects.  

The government states that new high-speed railways between Stockholm, Gothenburg and Malmö shall be constructed, but does not say when, where new stations will be built, or the specifications for such railways. It is believed it will cost almost SEK 300 billion to build them, which only illustrates how tight the funding of the bill is.

The SEK 165 billion allocated for maintenance and repair of the present railway system and SEK 197 billion for maintenance of the road system is less than needed. The government has decided against projects being financed by separate ear-marked loans. This means that Sweden will actually de-invest in the transport system, if the bill is passed.

It remains to be seen if any party contending to lead government is ready to commit more funding or spell out where to save. The Moderate Party and the Christian Democratic Party have come out against a high-speed railway network due to its construction costs, a project they once initiated just before the 2014 elections. This illustrates how policy positions can change.

Air transport, airports as well as shipping and ports are not covered in the bill, making additional decisions necessary.

The goal is to have emissions free transportation by 2045, but there are question marks regarding the policy to promote electrification, biofuels and a more effective transport system.

Altogether, this means that the discussions about projects, priorities and funding will continue for the time to come. Next steps will be for Trafikverket (The Swedish Transport Administration) to specify the action plan and projects before the end of October, with public consultation October-December and a final decision by the government on the National Plan for infrastructure, expected next year.

Migration

The red-green government has presented its proposal for a new migration law, to be in effect 20 July. The proposed law will then replace the temporary law put in place after the migration crises of 2015.

  • Asylum seekers will, by law, be granted only a time-limited right to stay, as a first step.

  • Refugees can apply for permanent residency after three years, given they are self-providing, know the language and have not committed any serious crime.

  • Immigrants will be able to bring family members to Sweden, given that they have a job, a home and can provide for their relatives.

The opposition parties were very critical. The Moderate Party stated that the proposal would increase migration at a time when it was needed to be drastically reduced. The Liberal Party called the proposed law temporary, since it will be replaced by a new government. The Sweden Democrats said the law would be negated by a new government. The Left Party, on the other hand, was critical and said the proposal would permanently divide families, arguing – like most parties did before – that uncertainty about residence status makes social and economic integration more difficult.

Public opinion according to Kantar Sifo

The latest public opinion poll shows few changes, the Moderate Party’s loss of 1.6% being the most significant change in party support.

More interesting is the combined support for the two possible government alternatives now emerging. The red-green coalition is, together with the Centre Party, and with support from the Left Party, in a 5% lead. Even if the Liberal Party reaches the 4% parliament threshold, that lead is still clear.

  • The present red-green coalition, together with the Centre Party and with support from the Left Party, gathers 50.4% of the votes and a predicted 184 seats in parliament (with 175 needed for a majority).

  • The Moderate Party and the Christian Democratic Party, supported by the Sweden Democrats, receive a combined 45%. That would equal 165 seats in parliament, while the Liberal Party would lose its representation given its present support level. Adding the Liberal Party, the four parties presently gather 48.1% support.

April 2021 brief

The race is very tight. Looking at previous elections, the opposition would have needed to be in a significant lead at this time, not least given the Corona crises, to form a serious government challenge. But given the turbulent situation and difficult times, it is uncertain if conclusions could be drawn based on previous election experiences.

  • There is a considerable gender gap in the backing of the red-green constellation. The parties are supported by 58.5% of the female voters but only by 42.4% of male voters.

  • The Social Democratic Party has passed the Moderate Party to become the largest party among first-time voters.

  • The Moderate Party has regained its strong support in the Stockholm region, as the Sweden Democrats have fallen back.

  • The Moderate Party is falling behind the Social Democratic Party in the city of Stockholm, where the Sweden Democrats are less than half the size it is in the country at large.