Key Points
- The Swedish general election on 9 September is likely to produce a hung parliament.
- The far-right Sweden Democrat party is expected to achieve the biggest gain, but would be unlikely to form a government because of its inability to secure a political alliance with establishment parties.
- A close poll result would increase the risk of sustained market pressure on the krona due to market fears of political uncertainty.
Event
Sweden is preparing for a general election on 9 September that is likely to result in a fragmented political landscape that will challenge the country’s traditional consensus-driven politics.
Sweden will hold a general election on 9 September. Opinion polls suggest that neither of the traditional centre-left and centre-right coalition blocs will secure a parliamentary majority. The far-right Sweden Democrats (Sverigedemokraterna: SD) is anticipated to gain the most, with its support varying from 18.5% to 24.2%, according to different polls. Nevertheless, IHS-Markit assesses that a
mainstream minority government remains the likeliest outcome of the election, with SD continuing to be largely ostracised by the other political parties. The election comes during a period of economic vulnerability as the Swedish exchange rate has come under pressure due to market fears over political uncertainty. Any surprises in the election result will likely result in further weakening of the krona.
The decline of the centre
The current centre-left minority government, comprising the Social Democrats (Socialdemokraterna: S) and the Green Party (Miljöpartiet de Gröna: MP), was elected in 2014. It has managed to govern through the tacit parliamentary support of the mainstream centre-right coalition bloc, the Alliance (Alliansen). During this period, Sweden has enjoyed strong economic growth (2.3% GDP growth in 2017) and a 10-year low for the unemployment rate (6.2% in July 201
. However, the refugee crisis in 2015 has shifted much of the public focus towards migration, resulting in a historically low support for S.