A brief (ECB/Fed-driven) sigh of relief yesterday in the Krona has ended as Sweden’s embattled PM has refused to resign over the government’s “disastrous leak” of the nation’s citizens’ information. Lofven has instead chosen to reshuffle his cabinet, ading “I don’t want political chaos in Sweden, that’s not what we need right now, I will take responsibility and ensure we don’t get a political crisis.”
However, as Bloomberg reports, opposition members were already signaling they weren’t satisfied with the steps taken, and Lofven’s government remains far from secure.
The prime minister said Home Affairs Minister Anders Ygeman and Infrastructure Minister Anna Johansson will leave the Cabinet, as parties representing a majority in parliament prepared no-confidence motions against them.
Defense Minister Peter Hultqvist will stay, Lofven told reporters in Stockholm on Thursday, arguing the specific motion against him was “not serious.”
The announcement follows speculation the prime minister would himself be forced to resign, or call an early election, in response to the deepening scandal. With the reshuffle, Lofven is buying himself time to negotiate with parliament.
Anna Kinberg Batra, head of the Moderate Party that leads the opposition, on Wednesday blamed Lofven for throwing Sweden into “a serious security crisis.”
“Confidence in the defense minister is exhausted,” she said. “The prime minister hasn’t taken responsibility — so we will demand responsibility in parliament.”
The anti-immigration Sweden Democrats also said they remained committed to a no-confidence vote.
Citi notes that political noise has erupted in Sweden, after the government botched its response to a security breach of classified information, and while the political situation doesn’t look like it will deteriorate for the time being, we think SEK upside is likely to remain limited for now.