Sweden's leader is not for turning : Carl Bildt, Sweden's Prime Minister, tells Annika Savill, Diplomatic Editor, in Stockholm about his country's economic crisis and his tough solutions

CARL BILDT, Sweden's Conservative Prime Minister, will slaughter more of his country's sacred cows to prepare it for entry to the European Community. In a week where Sweden's economic troubles - known here as 'the crisis' - made headlines around the world, Mr Bildt told The Independent: 'We have the problems we do because we remained outside the EC for too long.'

Mr Bildt has made use of the international attention to display his government's determination to stick by this mission. Last Wednesday Sweden raised its lending rate to commercial banks to 75 per cent to defend the krona, which is linked to the European Currency Unit. Reiterating that there would be no devaluation, Mr Bildt invoked his British counterpart and ideological ally: 'Devaluation is, as John Major said, the soft option. It leads to a downward spiral.'

A 75 per cent lending rate invokes images of a Polish nightmare rather than a Western success story. But, Mr Bildt emphasises, Sweden is not alone: 'The French were there in the 1980s, the Danes have been there too. We want to show that we mean business.'

There is no question of Swedes paying 75 per cent on their mortgages, but building societies did have to raise variable rate mortgages by nearly seven percentage points, to some 24 per cent, as a result of the move. Although very few Swedes have variable rate mortgages, the determination of Mr Bildt's anti-inflation message was unmistakable.

There is already much else for the Swedes to adjust to. The decision to make the fight against inflation the priority came in 1989, under Mr Bildt's Social Democratic predecessor, Ingvar Carlsson. Then came cuts in health insurance, a freeze on municipal taxes, cancelled rises in child benefit, the application for EC entry, a radical pensions reform, devolution of housing subsidies - and an unemployment rate of about 8 per cent.

Now that inflation is down to 2 per cent, Mr Bildt promises a further 'significant savings programme' of 30bn krona (pounds 3bn) to tackle the structural budget deficit, the legacy of decades of cradle-to-grave socialism. More public spending cuts will follow.

Could the public adjust to such a speedy succession of slaughtered sacred cows? 'We need to slaughter more,' Mr Bildt declares. 'But even if we are talking about important cuts, we will still be above the EC average in public spending.'

Observers have noted Mr Bildt's habit of discussing EC matters as though Sweden were already a leading member of the community, even though it will not enter until the mid 1990s. On Maastricht, he notes that a common foreign and security policy is 'necessary', and economic and monetary union is 'complicated but necessary'.

Mr Bildt was probably born with the conviction that he is the man to lead his benighted countrymen into 20th-century Europe. He is from an aristocratic Jutland family and his great-great grandfather, Gllis Bildt, was prime minister just over a century ago, devoting himself to strengthening Swedish-German relations.

Mr Bildt, 43, has had a meteoric career. He became leader of the Conservative Party at 37 and seems well on the way to re-establishing the family's political dynasty. He married the daughter of a previous Conservative leader and the couple's son, born last year, was cradled in President Bush's arms during a state visit to the United States.

If Mr Bildt's confidence reassures his European allies like Britain, he is criticised by political rivals at home for what they see as arrogance. One accused him of being so obsessed with his own prestige that he fails to consult on matters of national interest. 'He's just a sourpuss,' Mr Bildt replies. 'The alternative (to present policy) would be to try to make everybody happy at once.'

Non-socialist governments do not have a good survival record in Sweden. The coalitions of the 1970s and early 1980s, which succeeded four decades of social- democratic rule, repeatedly fell apart. Mr Bildt's four-party minority grouping of Conservatives, Liberals, Centrists and Christian Democrats came to power a year ago and is now seeking a platform of national unity with the Social Democrats. 'We'll have a go,' says Mr Bildt. 'We are not that worried about the parliamentary aspect.' And why should this post-socialist experiment work where others failed? 'Because this government is better.'

(Photograph omitted)