December 5, 2014 / 8:55 AM / 5 years ago

Swedish opposition gaining, political turmoil not threat to economy

STOCKHOLM (Reuters) - Support for Sweden’s main centre-right opposition and for the unaligned Sweden Democrats was growing before the government called a snap election this week, according to a poll published on Friday.

A general view of the Swedish Parliaament during the debate about the government's budget proposal in Stockholm December 3, 2014. REUTERS/Pontus Lundahl/TT News Agency

The failure of the Social Democrat-Green coalition’s first budget on Wednesday, voted down in parliament, prompted Prime Minister Stefan Lofven to call the first snap vote in 50 years, plunging Sweden into political turmoil.

March’s vote could lead to a repeat of the deadlock between the left-of-center and right-of-center blocs that has allowed the anti-immigration Sweden Democrats to exercise an effective veto on power, though the rating agency Fitch said the economy was unlikely to suffer damage.

The centre-right Alliance opposition bloc is now neck-and neck with the grouping containing the governing Social Democrats and Greens plus the Left party which offers support from outside government. Both blocs were backed by 41.7 percent of voters, according to one poll, published on Friday but undertaken before the parliamentary crisis.

In September’s general election, support for the blocs was 39.4 percent and 43.6 percent respectively.

Support for the Sweden Democrats had risen to 13.5 percent from 12.9 percent in September, according to the poll, which was carried out by Demoskop for the newspaper Expressen.

Markets, however, do not expect significant negative effects should March’s election lead to a victory for the centre-right or center-left, or produce a result that leads to a broad-based government that crosses the political divide.

Fiscal prudence has been the watchword of both main party blocs and new expenditures in both the coalition’s budget and the alternative presented by the opposition Alliance were fully financed. The opposition’s budget was adopted by parliament in Wednesday’s vote, leading Lofven to call the snap election.

“Sweden’s strong existing fiscal metrics and policy framework mean its public finances remain a ratings strength despite the greater political uncertainty,” Fitch wrote in the report.

The ratings agency’s view echoes comments from several Swedish rate-setters over the last two days.

Lofven has called on the mainstream parties to cooperate to exclude the Sweden Democrats after the new election if no bloc wins a majority.

Reporting by Anna Ringstrom and Johan Ahlander; Editing by Toby Chopra, Simon Johnson

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