Swedish leader torn two ways on welfare as election nears

Mr Goran Persson was either bored or irritated

Mr Goran Persson was either bored or irritated. Confronted by a voter demanding more generous training grants, the Swedish Prime Minister began flicking through a cookbook given to him minutes earlier by a party supporter.

Having stated his policy, the leader of Sweden's ruling Social Democrats declined to argue the finer points of local welfare delivery. Instead he used his campaign visit to Karlskrona, the old naval town 500 km south of Stockholm, to alert voters to danger ahead.

"It will be extremely unwise to stay home for the election. You could wake up the next day with a weak centre-right coalition," he warned.

The SDP, which came to office in 1994 with more than 45 per cent of the vote, has seen its ratings decline to about 37 per cent. Though it should remain the biggest party after September 20th, it may emerge with a reduced parliamentary base from which to form a minority government.

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That has been little solace to the main opposition Moderate Party, led by the former prime minister, Mr Carl Bildt, which has failed to breach the 30 per cent ceiling in any recent opinion poll.

Mr Bildt, who left Swedish politics after the last election to become the international peace envoy in Bosnia, hopes to form a non-socialist alliance with the Liberal and Christian Democrats. But even that grouping would not unseat Mr Persson.

The real winners of the campaign have so far been the former communist Left Party, whose support has increased from 6.2 per cent at the last election to 12 per cent.

Mr Persson would like to take his party leftwards, offering more generous benefits and improved welfare, while not committing Sweden to European economic and monetary union.

But that desire is cancelled out by his experience as finance minister in the mid-1990s, facing a 12 per cent budget deficit and rising unemployment. Since then tight fiscal policy has returned the country to break-even with a 2 per cent budget surplus in sight and lower unemployment.

That financial prudence, fully endorsed by the Finance Minister, Mr Erik Asbrink, jars somewhat with the SDP's manifesto. It promises increased child benefit and lower charges for nursery places, with better pension provision, sharply reduced unemployment and higher grants to local authorities.

Yet Mr Asbrink points out: "Such measures can be afforded because we are enjoying solid growth and low inflation; the nine billion krona (£956 million) of new spending is well within the reserves set up in the spring budget."

That message has pleased the markets, where analysts have applauded the SDP's "economic corset". But it irritates Moderate politicians and Mr Bildt in particular. He has accused the government of diverting attention from Sweden's onerous tax burden, and has proposed spending cuts to finance lower taxes. "We need to get away from the whole idea of a collectivist welfare state," he said.

It is a difficult message to sell in a country where the public sector employs more than 30 per cent of the workforce, and where income tax is paid with alacrity.

"Sweden is not ready for his kind of medicine," according to one political analyst. Such sentiment has helped keep the Social Democrats in power for all but nine years since 1945.

Nevertheless, its parliamentary base is slowly weakening. The anti-nuclear Centre Party, which has supported the SDP for the past year, has said it wants a non-socialist government.

Mr Persson has hinted he could work with the Liberals and Christian Democrats in a less socialist government - and that combination could win support from the Centre Party.