Swedish premier's job on line after Euro defeat

Swedish Prime Minister Goeran Persson’s future was on the line today after his humiliating defeat in the euro referendum.

The nation of nine million turned its back on the pro euro premier and more than 56% voted against adopting the EU’s common currency.

It was a much heavier defeat than anyone expected, especially following the murder of pro europhile Anna Lindh, the Foreign Minister who was stabbed last week.

Persson, who said he would not resign because of the results, has ruled out any new vote on joining the European Monetary Union before 2010.

After it became obvious he had been defeated, he said the "government would respect the vote, but added that “in the long term this means worse possibilities for Sweden.”

“I think it’s a fantastic result that we’ve managed to resist the enormous campaign from the yes side,” said Peter Eriksson, a spokesman for the Green Party which worked with the left to mount its grass roots opposition.

“I was very worried we would lose. But even after the murder people were able to separate their emotions from the facts.”

Police are still searching for suspects in Lindh’s murder.

Analysts said today that the recession plaguing Europe and unemployment in major EMU countries like France and Germany likely scared off voters in the traditionally euro-sceptic country to begin with.

But Finance Minister Bosse Ringholm said problems in Germany and France have nothing to do with the euro.

“Germany’s problems are a result of the unification and France’s problems they have brought on themselves with large tax cuts, among other things, which have been idiotic because there was no money,” he said.

Swedish economist Jan Theorell said economic concerns were a driving factor in the run-up to the campaign, which polls had projected would go against the yes, but at a narrower margin.

“Those who voted have, to a great extent, referred both to their personal financial situation and the finances of the country,” he said.

EU Commission President Roman Prodi said it was certain that Sweden would lose face, while Graham Watson, leader of the Liberal Democrats in the European parliament said that “continued self-exclusion from the euro will bring a crushing loss of investment and political influence and increased vulnerability to money market turmoil.”

In neighbouring Denmark, which rejected the euro in a 2000 referendum, EU opponents celebrated the Swedish “nej.” To them, it was a sign that they are not alone against “the undemocratic EU development,” said left-wing MP Soeren Soendergaard.

However, the government and pro-euro supporters, said Sweden’s referendum would have little impact.

When the euro was launched in 1999, Denmark locked its currency to the euro, meaning Denmark’s central bank closely follows the moves of the European Central Bank and raises or lowers its rates accordingly. Sweden – and Britain – have not done so and their currencies fluctuate freely against the euro.

In Norway, the decision could douse a growing sentiment for the country of 4.5 million to consider joining the EU.

“I would think that the result in Sweden would make the yes side in Norway calm down for a while,” said Aaslaug Haga, leader of the anti-EU Centre party.

She called the Swedish vote a boost to the anti-membership movement in Norway, and said it would probably have the effect of making EU membership a bottom-run issue during 2005 national elections.