Sweden Election: Russia and Defense Spending Limit Next Government’s Choices

Whoever wins Sweden’s general election on Sunday faces an unusually difficult financial equation characterized by a structurally higher defense bill, growing demands on the welfare state, and shrinking fiscal room to pay for both. The challenge unfolds as Russia’s war in Ukraine grinds through its fifth year, while uncertainty over U.S. President Donald Trump’s commitment to European security exerts mounting pressure on the continent to shoulder a heavier share of its own defense burden.

Defense Spending Pressures and NATO Commitments

Sweden joined NATO in March 2024, officially abandoning more than two centuries of military non-alignment in the wake of Russia’s full-scale invasion of Ukraine. Data from the Stockholm International Peace Research Institute shows that Sweden’s military expenditure rose sharply between 2022 and 2025 as the nation launched a major rearmament drive. Under agreements reached by NATO members last year, alliance nations must significantly hike defense spending to 3.5% of GDP by 2035, alongside an additional 1.5% allocated for defense- and security-related spending. Despite this transformation, foreign policy remained largely absent from the electoral debate. Jonas Tallberg, professor of political science at Stockholm University, noted that the silence stems from a broad consensus among major parties rather than a decline in the issue’s importance. “The signal being sent by effectively all parties is that Swedish voters will have to get used to defense being a much larger part of the budget,” Tallberg told CNBC, adding that the political debate focuses on funding mechanisms rather than the principle of investing in defense.

Domestic Welfare Trade-Offs and Economic Reality

While security policy unites the political establishment, voters have focused primarily on household finances, health care, and schools. Economists warn that the incoming administration faces severe constraints when trying to fulfill campaign pledges. “We do see a lot of election promises, like we usually do in an election campaign,” SEB Chief Economist Jens Magnusson told CNBC. “But I do think that it will be a rather hard crash when these promises meet with the reality after the election.” Magnusson emphasized that the next government cannot simultaneously cut taxes, increase spending, borrow the difference, and maintain elevated support for Ukraine and defense. Tallberg pointed out that rising defense allocations inevitably displace other budget items. “The rising levels of defense spending that we’re seeing in Sweden and in many other parts of Europe have to be at the expense of something, and typically aspects related to the welfare state or, for that matter, foreign aid,” he said. Swedbank Chief Economist Mattias Persson acknowledged the direct trade-off between defense and welfare expenditures, noting that policymakers view security as a foundational requirement for preserving public services. “We can’t have welfare if we can’t have secure borders,” Persson said, stressing the necessity of prioritizing scarce resources.

Political Landscape and Coalition Uncertainty

The center-left opposition parties led by the Social Democrats held a meaningful lead in most polls ahead of the vote, though that lead narrowed as the Moderate Party’s Ulf Kristersson mobilized support. The current government governs with the backing of the far-right Sweden Democrats, a party the center-left refuses to collaborate with. As voters head to the polls on Sunday, the exact configuration of the post-election government coalition remains entirely undecided.

Photo: europesays.com