After only two months in office, the Social Democrats’ precarious minority government in Sweden is already facing a crisis over their first budget. The government is likely to prevail, but the fragmented parliament, destabilised by the rise of the insurgent xenophobic Swedish Democrat party, may be a sign of things to come across northern Europe. Their success in flushing out anxieties among voters about the impact of immigration on Swedish culture and disenchantment with the political elite is being replicated by parties such as the Front National and UKIP and is pulling the political mainstream off the political centre ground of pre-2008 Europe. The rising salience of culture and identity politics marks both a serious challenge for the political establishment, and a stepchange in political risk for cross-border businesses and investors in Europe.
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