In the 1960s classic American sitcom, Lost in Space, when the robot was confronted by a paradox it would wave its arms wildly, saying does not compute, over and over again. Swedish political analysts feel exactly this way.

Over the last two election cycles, the Sweden Democrats (SD), have emerged as a third bloc, rivalling the Alliance and Red-Greens. Opinion polls show them consistently polling at around 20%, and with public sentiment for both other blocs running at around 40%, no side has a majority, or even close to it. The SD support therefore acts as a blocK with a capital “K”.

Negotiation and compromise are called for. The problem is that very few are publically interested in that at this stage, and where one party sees room for discussion, the others rule it out. The following quotes from the political parties highlight the dilemmas.

Forget it. Stefan Löfven (S), when asked if he would be open to supporting an Alliance government with Ulf Kristersson as Prime Minister, for the sake of bipartisan cooperation.

They (the SD) stand for something other than us democratic parties. One cannot say that Muslims are not real people” … one thing I do not intend to do … is to give power to the Sweden Democrats. Stefan Löfven (S)

A future Moderate Party-led minority government will need to build temporary alliances in the Riksdag to push through its policies. That work has already begun. Group leader Tobias Billström (M) commenting about Ms discussions with the SD

We will never negotiate with SD. Annie Lööf (C)

The Alliance should continue its partnership and seek opportunities with the Social Democrats (S) and the Green Party (MP), which is better than SD. Björklund (L)

Yes (Löfven is trying to prevent the Alliance from coming to power), but we are reporting to the Left Party, and we think it’s the biggest bloc that should form government. I will do everything possible to prevent the Alliance from gaining power, but we must respect the outcome of the vote.” Jonas Sjöstedt (V)

Or to put it plainly, the Social Democrats are doing everything they can to keep the Moderates out of government. The Moderates are doing everything that they can to lead a minority government with the support of SD. But, two of their Alliance partners (C and L) are dead against that. SD agrees with C and L that their policies are mutually incompatible –immigration and integration issues being showstoppers.

So what will happen? That is the question that we address in this Monthly Policy Review.

As the photo above suggests, this gridlock is a risky path for Sweden to go down. Like a canary in a coal mine, the Krona is dropping in value, and a succession of business leaders and economists are giving warnings. Nordea sees risks as likely arising from the housing market, with a minority government lacking the power to deal with them. Handelsbanken doesn’t see major risk in the short-term, but believes that longer term a minority government makes it difficult to push through reforms. Business is getting downright frustrated, with Klarna’s CEO one of a number stating that Sweden’s politicians lack ambition.

We cover his views and many others in our blog series Should Expats Care? We argue that you should care, given the changes that are needed to visas, housing and tax.

Elsewhere in this Monthly Policy Review we cover the effect of the unbelievably warm summer on the election, take a deeper dive into the process that should happen after September 9 and review the foreign policy positions of each party. With the entire edition devoted to our elections coverage, we offer it for a special one-off purchase, or buy our complete elections series.

Final thoughts

With such a tight result it is next to impossible to predict either the composition of Sweden’s next government, or the policies that it will adopt. The future of Sweden could be either better integration, or a hard line against immigrants. And government solutions could be either guided by the firm hand of the bureaucracy or free market economics. In the end, it is possible that it will all come down to the ambitions and goals of the key power players. Is Löfven tired and wants out? Does Kristersson have the leadership skills to guide the Alliance through tortuous negotiations? And don’t forget Jimmie Åkesson as kingmaker  – see our profile of the man from Sölvesborg.