If you want to understand the Swedish referendum on the euro (the vote takes place on Sunday 14 September), you have to take into account “the Swedish exception”. This is about more than nudity, Ikea and driving around in the daytime with your sidelights on. It is about cleanliness – if you dive into the Baltic in the heart of Stockholm, you can be confident that the water will be clean. And it is about egalitarianism – in the workplace, the most junior secretary can talk to the CEO. But it is also about a very nannyish state.

If you want to pop out and get a bottle of red in Sweden, you’d better plan ahead. All Sweden’s off-licences are run by the state through the officious-sounding company Systembolaget AB, with the apparent aim of making the purchase of alcohol as inconvenient as possible. They close early in the evening during the week and at two o’clock on a Saturday. Bottles are displayed in locked glass cabinets, like arcane pharmaceutical products, and customers must wait in line before confessing to the stern-looking shop assistant what inebriating potions they require. The system was introduced in the 19th century to prevent the Swedes from collectively drinking themselves to death. It seems the government still believes its citizens are too irresponsible to be trusted with the demon drink.

Most Swedes are so used to being treated like children in a sweetshop under parental supervision that they rarely complain. But employers have grown fed up with this kind of society. The combination of regulation and high taxation, they argue, has squeezed the dynamism out of Swedes. Nearly a quarter of the population work in the public sector and two-thirds receive state benefits. Higher-rate income tax is 56 per cent, sales tax is 25 per cent and employers must pay 34 per cent tax on each employee’s wages. Business blames all this for Sweden’s economic decline – it was the second-richest country in Europe 30 years ago, and although its GDP was ahead of Japan’s, Germany’s and the UK’s in 2002, it has been overtaken by its neighbours, Norway and Denmark.

What is most exasperating for those in favour of lower taxes is the near invincibility of the Social Democrats, whose pre-eminence over the past 80 years has rendered Sweden a virtual one-party state, albeit a democratic, Scandinavian one. To those who want to see a lower-tax society, the euro has become a way of changing Sweden from the outside, forcing it to become more like other European countries – as it may well have to do inside the single currency, given the European Central Bank’s suspicion of high public spending. As the newspaper commentator Johan Hakelius puts it: “We have a power elite that has given up on the Swedish people. The people keep voting Social Democrat. We need to elect a new people, the elite believes. Anything is better than Swedish social democracy; let’s get some European social democracy at the least, is the attitude.”

True, a Social Democrat, the prime minister, Goran Persson, is the leader of the “yes” campaign. But the “no” campaign – currently ahead in the polls – takes in most of his Social Democrat support among the public and a sizeable minority of his party’s MPs, including a handful of ministers. It is one of Stockholm’s worst-kept political secrets that Persson hankers after a senior post in Brussels. If he fails to lead Sweden into the euro, the European Commission is unlikely to offer him a job and he might also be forced to resign as prime minister. No wonder he has become more aggressive and hectoring as the campaign has gone on.

Time is running out for Persson, but now that the political and media establishment has started to turn up support for the euro, it is possible that the 15 per cent of voters who are still undecided could form a late swing to the “yes” side. Already, “yes” politicians have warned that should voters have the temerity to reject the euro, the next opportunity to join will not present itself for at least a decade. The Swedes so far seem unmoved.

But if the “no” camp brings off its victory – thought unlikely at the start of the campaign – it must think about the champagne in advance. Systembolaget shops are closed on Sundays.

This piece appeared in the New Statesman on September 8 2003

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