The centre-right government of Fredrik Reinfeldt has been a great success, yet voters may well eject it in favour of the Social Democrats

FOR a decade Sweden could plausibly claim to be Europe’s most successful economy. Anders Borg, the (formerly pony-tailed) centre-right finance minister since 2006, likes to trot out numbers for his time in office: GDP growth of 12.6%, a rise in gross disposable incomes of almost 20%, a budget moving into surplus and a public debt barely above 40% of GDP. These figures not only outshine Britain and the euro zone; they also eclipse America.

The government’s achievements go deeper still. It has overturned Sweden’s old image as a high-tax, high-spending Socialist nirvana. Twenty years ago public spending took an eye-watering 68% of GDP; today the figure is heading to 50% (see chart). Although the tax burden remains high by international standards, top rates have been cut, as have corporate taxes. Taxes on gifts, inheritance, wealth and most property have been scrapped. Few Swedes need now to flee into tax exile.

Yet the voters seem ungrateful. Although the polls have narrowed sharply in the closing days before the September 14th election, all the signs are that Swedes will toss out the centre-right alliance in favour of a centre-left government led by the Social Democrats. The party leader who would replace Fredrik Reinfeldt as prime minister is Stefan Lofven, a cheerily avuncular former union boss. Astonishingly, he would be the first prime minister since universal suffrage in 1921 to have neither parliamentary nor government experience. One reason for change is that Swedes are tired of having the same political leaders—Mr Reinfeldt, Mr Borg and Carl Bildt as foreign minister—for eight years. A second, ruefully conceded by Mr Reinfeldt himself, is that stability has made voters readier to take a gamble. Moreover, under Mr Lofven the Social Democrats, for decades the traditional ruling party in Sweden, seem mild and unthreatening.

Yet behind the prosperity of cities like Stockholm and Gothenburg more concrete causes of dissatisfaction can be found. Inequality has risen fast, as almost everywhere—but Swedes care about this more than most. Mr Reinfeldt boasts of the creation of 300,000 private-sector jobs, yet unemployment is stubbornly high at almost 8%, and far worse among immigrants and the young. Thanks partly to tight monetary and fiscal policy in 2012-13, growth has slowed and Sweden is perilously close to deflation. At the same time, fast-rising property prices in the big cities are another source of complaint.

Then there are the public services, especially education and health care. As part of its drive to modernise the state, the alliance government has expanded choice, vouchers and private provision far more than other countries. Today a fifth of pupils are in privately run schools. Swedes have come to like choice, which was originally brought in by the Social Democrats. But scandals in a few old people’s homes, the bankruptcy of a school company and a drop-off in educational performance have combined to discredit the use of private capital. Opinion polls find a clear majority of Swedes against private firms making profits in public services.

The government remains defiant. Mr Reinfeldt notes that a few months ago his four-party alliance was 18 points behind the left-wing parties; the gap has since narrowed to barely five. Mr Borg warns loudly against tax rises by the centre-left. He supports choice and rejects claims that private provision of public services has reduced quality. Most independent analysts agree, and a new book backs them up*.

Some Swedish businessmen are warning about the dangers from the Social Democrats. Yet this seems alarmist. Magdalena Andersson, who is likely to take Mr Borg’s job, is moderate to a fault. She has no plans to challenge the monetary-policy independence of the Riksbank. As for fiscal policy, she wants to raise a few taxes, including VAT and the top marginal rate, but nothing like as high as the Social Democrats of old. She has no complaints about the overall state of the public finances. Indeed, she wants to move into budget surplus faster than Mr Borg.

A bigger risk is that a Social Democrat-led government may stop or reverse public-sector reform. Ms Andersson wants to regulate private providers more, for instance requiring privately owned schools not to cut teacher numbers. Yet the government also plans tougher regulation, and the Social Democrats have no wish to drive the private sector out altogether.

The greatest danger lies in Mr Lofven’s ability to form a coalition. The Social Democrats’ voting share is in secular decline, from 45% or so two decades ago to barely 30% now. The four alliance parties have a joint manifesto; the Social Democrats merely say they want to team up with the Greens, but that is unlikely to yield a majority. Their chances of luring any of the alliance parties are small, and they do not want to join the ex-communist left. Nobody will work with the far-right anti-immigrant Sweden Democrats, who may take 10% of the vote, so any coalition is likely once again to be a minority government. Mr Bildt, who was prime minister in 1991-94, suggests that a Social Democrat-led coalition will be fragile and may well not last a full four-year term.

That might not matter much given Sweden’s sunny prosperity. But one cloud is the weakness of the euro zone, by far Sweden’s biggest market. Sweden could also lose its reputation in free-market circles in Britain and America for innovative public-sector reform. And there is the shadow cast by a belligerent Russia. The centre-right wants to push up defence spending, which many Social Democrats dislike. Within Europe Mr Bildt has been a one-man diplomatic force against Russian aggression.

Thanks to its centre-right government, Sweden has played a bigger part in Europe and on the world stage than its 10m-odd population would seem to justify. Its withdrawal to the wings would be regretted far beyond Stockholm.

* “Sweden and the Revival of the Capitalist Welfare State.” By Andreas Bergh (Edward Elgar)