STOCKHOLM (Reuters) - A Center-right alliance led by Moderate Party leader Fredrik Reinfeldt won power in Sweden in an election on Sunday, ending 12 years of Social Democrat rule by vowing to lower taxes and trim the welfare state.
Reinfeldt, who will be the next prime minister, declared victory in a tight election. Social Democrat Prime Minister Goran Persson, one of Europe’s longest-serving leaders, conceded defeat after 10 years in office and will quit as party chief.
According to almost complete results from Sweden’s Election Commission, the four-party opposition bloc had won 48.0 percent of votes to 46.2 percent for Persson and his allies.
Taking the stage with his arms raised, a jubilant Reinfeldt told supporters: “We campaigned as the New Moderates, we won as the New Moderates and together with our alliance partners we will rule Sweden as the New Moderates.”
The result was a victory for the alliance’s pledges to stimulate job growth by fine-tuning, but not dismantling, the welfare system. Persson, whose party has ruled Sweden for six of the last seven decades, had vowed to continue government largesse and keep one of the world’s heaviest tax burdens.
Despite Sweden’s strong economic performance under the Social Democrats, opinion polls had shown many favored change in the Scandinavian country of just over 9 million people due to voter fatigue with Persson and a perceived lack of new ideas.
Persson, clutching a bunch of red roses, vowed his party would fight back, though without him at the helm.
“We have lost the election, but we are not a defeated party. Now we are aiming for a comeback, but it is not a comeback I will lead,” he told a crowd of supporters.
Many Swedes believe in the principle of a tightly woven social safety net but say the system conceived by the Social Democrats needs reform.
The election was closely watched by governments of other countries in the European Union facing the need of welfare reform because of aging populations and creaking pension and healthcare systems.
In Asian trading, the Swedish crown firmed against the euro. Economists expect an alliance government, with its tax cuts and plans to sell off government stakeholdings, to be positive for financial markets.
REINFELDT REVIVES THE OPPOSITION
The Moderate Party was crushed at the last election in 2002 but 41-year-old Reinfeldt enhanced his party’s appeal by shifting it toward the center and paring down earlier tax and benefit cut promises.
He leads an alliance with the Folk Liberals, Christian Democrats and Center Party that says years of excessive benefits and high taxes have eroded Swedes’ will to work. Reinfeldt also said the real unemployment rate was about 20 percent, almost four times the official level.
Reinfeldt says changes are necessary now to preserve the welfare system for the future, a theme of reform across Europe.
German Chancellor Angela Merkel and her conservative-Social Democrat coalition have been trying to fix a troubled healthcare system, cut corporate taxes and tweak jobless benefits.
In Britain, British Prime Minister Tony Blair has reformed the pension system, while neighboring Denmark has cut taxes and launched more flexible labor market rules.
Reinfeldt intends to sell off some 200 billion Swedish crowns ($27.6 billion) worth of state-owned shares in listed companies over four years. His privatization push could include government holdings in bank Nordea, telecoms company TeliaSonera and airline SAS.
Reinfeldt favors NATO entry, if there is broad agreement on the issue. He wants Sweden more involved in the EU but has no plans to hold a referendum on the euro currency in the next four years. Swedes rejected adopting the euro in 2003.
Isanely stupid Swedish voters decided for a break from the Social Democrats. These are largely the same Swedish who voted for Social Democrats in the past.
How could the Swedes go from being so flawlessly brilliant in their voting preferences to so mind-numbingly stupid?
That is sarcasm, of course - the real issue is how European nations are beginning to react to the stagnation that the European model has created. While Sweden’s welfare state model isn’t getting dismantled, what is interesting is the public perception that Europe is facing a growing wave of reformist sentiment.