Sweden's Prime Minister, Stefan Lofven

Sweden’s prime minister defended his centre-left government’s first month in power after business critics labelled its start as “catastrophic” and “more and more hostile”.

Stefan Löfven told the Financial Times that he was focused on cutting unemployment, improving school results and boosting the Nordic country’s famed welfare system after what he characterised as eight years of centre-right rule “when everything was about reducing taxes”.

His biggest test in the coming weeks is to pass his minority government’s budget in a vote that could bring down the Social Democrat-led government.

But business executives have been alarmed by the anti-business rhetoric from some ministers, especially among the Greens, who are the junior coalition partner and have threatened to close Stockholm’s Bromma airport.

Other policy ideas that have upset business leaders include proposals to restrict private companies’ ability to profit from public services, and reducing the country’s use of nuclear power.

Olof Stenhammar, who founded the forerunner to Sweden’s OMX stock exchange, wrote in Dagens Industri, a business newspaper, last week: “Löfven’s first month has been catastrophic . . . The question creeps in: is this the weakest prime minister Sweden has had?”

Christian Clausen, chief executive of lender Nordea, recently told the Financial Times: “It seems like a lot of smaller things: each of them doesn’t matter much, but when you pile them up it looks like it is getting more and more hostile.”

Mr Löfven sought to deflect the criticism, saying his government would take a “much more active industry policy” than its predecessor.

He said about Bromma – perhaps the most worrying issue for business in a country that is 1,600km from top to bottom – that “we will never have a situation in Sweden where we worsen the transport situation for business, whether it’s goods or people”.

Mr Löfven’s most immediate challenge is to pass his budget with the populist, anti-immigrant Sweden Democrats potentially holding the balance of power. If they voted with the four centre-right opposition parties, they would together have a majority, triggering a government crisis.

However, aides suggest that failing to get the budget passed would not necessarily bring down the minority coalition, made up of Mr Löfven’s Social Democrats and the Greens. They said negotiations could restart with several of the smaller centre-right parties that Mr Löfven has already tried to woo.

Sweden is only the latest European country where an anti-immigrant, anti-establishment party is posing a challenge to mainstream political parties.

Most political experts think the Sweden Democrats will not try to provoke new elections because its charismatic leader, Jimmie Akesson, is ill; but they admit the situation is unpredictable, not least because the party has gained in popularity since the September elections.

Sweden’s Migration Board added fuel to the immigration debate last week after saying it expected a record 95,000 immigrants to arrive next year. That would exceed this year’s forecast of 83,000 and the record 84,000 arrivals in 1992, after the Balkans war.

Mr Löfven said Sweden would continue to accept refugees. “In the short term, there’s a cost, absolutely. But we are doing it because these people are running for their lives. It’s not like they come here because it’s fun. I can’t slam the door in their faces.”

But he added that he wanted to have a debate about the sharing of responsibility both inside Sweden and within the EU. “What we need to discuss in Europe is: are we all taking our responsibility? Europe needs to take more of a solidarity perspective so all countries do what they can.”

Mr Löfven’s first month as prime minister was also marked by the Swedish military’s hunt for a foreign submarine in the Stockholm archipelago. This was followed by an opinion poll which showed that, for the first time, more Swedes were in favour of joining Nato than were against it.

Mr Löfven reiterated his party’s opposition to Nato membership, saying its principle of collective defence – article 5 – was “a limit for us”.

But he conceded that Russia was increasing its provocations in the Baltic Sea area as its aircraft have flown into Swedish, Finnish and Estonian airspace.

“It is a more tense situation right now. It is not like we are saying that Russia is an immediate military threat to Sweden. But the situation is more tense and we are increasing our military expenditure,” Mr Löfven said.

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