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Set for second term as Swedish PM, Lofven faces balancing act

STOCKHOLM (Reuters) - After months of deadlock, Social Democrat Stefan Lofven looked set for a second term as Sweden’s prime minister, but he will be walking a tightrope, needing to placate both his centre-right partners and the Left Party to stay in power.

Swedish Prime Minister Stefan Lofven (R) meets with the Speaker of the Parliament Andreas Norlen, in Stockholm, Sweden January 16, 2019. TT News Agency/Anders Wiklund via REUTERS

The speaker said parliament would vote on Lofven’s candidacy on Friday after he struck a policy deal with the Centre and Liberal parties and the Left Party said it would abstain in the vote, giving the former welder and union leader the numbers he needs to be elected.

But the Left Party said it would try to pull the plug on Lofven if his government swung too far to the right, raising that prospect that Lofven will struggle to deliver on an agenda that includes tax cuts and labour market reform.

“We have an agreement with four parties and I plan to deliver on that,” Stefan Lofven told reporters. “What the Left Party decides to do...that is up to them.”

September’s election delivered a hung parliament with neither major bloc able to rule without the support of the anti-immigration Sweden Democrats, a party with roots in the white-supremacist fringe and who hold the balance of power.

After months of wrangling, Lofven agreed a historic deal bringing together the Social Democrats and the Greens - who were part of Lofven’s previous minority coalition - with the Centre and Liberal parties from the centre-right Alliance.

Lofven, who intends to govern again with the Greens, has promised to drive a sharp swing to the right in Swedish politics, the steep price to be paid for enlisting Centrist and Liberal support.

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However, he risks being held hostage by the Left Party, which supported his previous government but pledged to seek to bring down Lofven if he proposes bills to loosen up the tightly regulated labour market or ease rent control rules, taboos for the centre-left until now.

“The Left Party has the power of veto over this government,” Ulf Kristersson, the head of the Moderate Party told reporters, saying his right-wing party would try to topple Lofven’s government at the first opportunity.

“We will not save a government that we think should never have taken power.”

But if Lofven fails to deliver on the package of market-friendly measures, he risks losing the support of the Centre and Liberals, leaving him facing a difficult task of finding the middle ground in the coming months.

“You cannot exclude the chance that we will have another crisis,” said Henrik Ekengren Oscarsson, a political scientist at University of Gothenburg.

GRAPHIC - Election scenarios:

Reporting by Stockholm Newsroom; editing by Niklas Pollard and Angus MacSwan