Persson faces uphill battle in euro campaign
A No vote would be highly damaging for the SDP, which has run Sweden for all but nine of the last 71 years. It would also be a further rebuff for the single currency - the Danes rejected it in September 2000. It would add to the impression that countries that give their citizens a specific vote on the euro tend to stay out.
"The referendum can still be won - but that's not the way it's heading at the moment," admits Carl Bildt, the former Swedish prime minister and a leading Yes campaigner.
Financial Times, 5/6 2003

Göran Persson, theSwedish prime minister, badly needs something to go his way in the countdown toSweden's euro referendum, now just 103 days away. The question is whether next week's UK decision on when and whether to call a vote on joining the single currency will provide it.

If the UK keeps open the possibility of holding a referendum before the next general election, it would be taken positively in Sweden. But a more negative tone from the British government would reinforce the view of Swedish eurosceptics that Sweden, too, should wait and see.

The latest opinion polls show Swedes will reject the euro in the vote planned for September 14 - and by a hefty margin. A Gallup poll published on Monday gave the No side 50 per cent, with only 32 per cent in favour and 18 per cent undecided. Financial markets, taking their cue from the surveys, are also expecting a No. "The referendum can still be won - but that's not the way it's heading at the moment," admits Carl Bildt, the former Swedish prime minister and a leading Yes campaigner.

The anti-euro sentiment that has prevailed for more than six months has deepened in recent weeks. It has not helped Mr Persson that the powerful, blue collar Landsorganisationen trade union group refused to support euro membership after the Social Democratic government failed to meet its demand for a buffer fund. The fund would have partly operated to combat unemployment during an economic downturn. Instead the LO will adopt a neutral stance.

Nor did the prime minister do himself any favours last month by silencing internal dissent in his party. This was after a number of senior SDP members, including cabinet ministers, had spoken out against joining the euro. The clampdown was seen as a panic reaction and only served to highlight the extent of SDP divisions.

Persuading Swedes to join the euro at a time when the Swedish economy is out-performing the eurozone's is likely to be a big problem for Mr Persson. The flow of economic news from the eurozone, and particularly from Germany, Sweden's largest trading partner, is almost unremittingly bleak. "Why should Swedes want to join a club that is doing badly?" muses one diplomat.

When Sweden voted to join the European Union in the mid-1990s, it helped the Yes campaigners that the country was just emerging from the deep economic crisis of the start of the decade. Even then, the endorsement - 52 per cent in favour, 47 per cent against, with 1 per cent of voters cast blank - was hardly enthusiastic.

This time round, eurosceptics are arguing that Sweden risks losing its ability to manage its own economy and it will concede too much power to Brussels and the European Central Bank. Per-Olof Eriksson, a former chief executive of Sandvik, the engineering group, says: "Europe is not ready for one currency yet. Sweden can say Yes to the euro at any time in the future. If we say Yes now, we cannot change our mind later."

Supporters of the euro kick-started their campaign last month, earlier than originally planned, in an attempt to combat the increasingly negative opinion polls. But the debate will get serious only in the six weeks before the vote. The Social Democrats have the support of the main opposition party, the Moderates, and two other centre-right parties.

Most business leaders are in favour, as are the media, leaving opponents of the euro to focus their case on the negative views of some economists and former central bank governors.

Mr Persson, a strong campaigner and speaker, and Anna Lindh, his foreign minister, will be crucial in swaying the large numbers of undecided voters.

Binit Patel, economist with Goldman Sachs in London, says: "Swedish public opinion can change very quickly. In the run-up to the referendum on the European Union, there was a majority for a No, but, once the big guns started campaigning, that changed."

But the stakes are high. A No vote would be highly damaging for the SDP, which has run Sweden for all but nine of the last 71 years.

It would also be a further rebuff for the single currency - the Danes rejected it in September 2000. It would add to the impression that countries that give their citizens a specific vote on the euro tend to stay out.

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