Swedes vote the left back to power

SWEDEN yesterday voted the Social Democrats back into power after three years of Conservative-led rule, hoping for a return to the traditional models of economic security after soaring unemployment, interest rates and budget deficit levels.

It was the first of two key votes this year that will determine the direction of the Swedish welfare state for the remainder of this century. Ingvar Carlsson, the Social Democratic leader who returns to the prime-ministership after three years in opposition, now faces the challenge of both cutting public spending down to size and persuading the Swedes to vote for entry to the European Union in a referendum in November.

Mr Carlsson, whose party captured more than 45 per cent and can rely on the former Communist Party for an overall Socialist majority, described the result as 'one of the best elections Swedish social democracy has ever had'. He promised that 'conditions are now in place for a very strong government' and pledged 'very forceful economic policies' to tackle the budget deficit, economic injustices and unemployment running at more than 10 per cent.

He said he would have parliamentary support for his plans to cut the pounds 16bn budget deficit by a third, but added: 'If more is needed, we want an authorisation from the people to do that . . . it is absolutely clear that we have received it. People are aware of the crisis, but want the burden to be distributed equally.'

Carl Bildt, the outgoing prime minister, has repeatedly accused Mr Carlsson of planning new taxes and lacking the strength to cut down the most extensive welfare state in Western Europe. He said his Conservative party had taken over an economy in free fall from the Social Democrats in 1991, adding: 'To carry the government responsibility in economically tough times always has its cost.' Although support for his party remained at around 22 per cent the four-party non-Socialist bloc as a whole dropped to less than 45 per cent. Mr Bildt warned: 'We now have eight weeks to go to the EU referendum. We are the pro-Europe party in Sweden.' There is a consensus among leaders of all major parties for entry into Europe, but most doubters are among members of the Socialist bloc. The Communist party, on which Mr Carlsson has to rely for parliamentary support, has a stated policy against joining the Union.

A new opinion poll last night showed a majority of just over 51 per cent in favour of European entry. Many believe, however, that it requires the leadership of the Social Democrats themselves - who built up the Swedish welfare state - to inspire sufficient confidence in the Swedes to accept both letting go of the apron strings of the welfare state and joining the EU.

But in the long term, this may also require a joining of forces by both sides of the political spectrum. Hopes of such a coalition in the shape of a Social Democrat- Liberal pact dwindled after the latter party polled only some 7 per cent, less than it had set as a condition for becoming a junior partner with the Social Democrats.

Mr Carlsson has promised on the one hand to create 90,000 new jobs, and on the other to introduce 'generous tax reduction rules for companies to encourage industrial investment'. Sweden's leading exporters have warned in the past week of capital flight and even higher unemployment should the tax burden be increased.