Ingvar Carlsson

Carlsson (right), with wife Ingrid (far left), First Lady Nancy Reagan (left), and President Ronald Reagan (far right), in a 1987 visit to the White House.

Following the assassination of Olof Palme in 1986, Ingvar Carlsson became the new Prime Minister or Statsminister and party leader. Together with Minister for Finance Kjell-Olof Feldt, the government turned a budget deficit of 90 billion SEK to a surplus of a few hundred billion SEK, which initially led to large investments and record low unemployment. 1980s Social Democratic neoliberal measures—such as depressing and deregulating the currency to prop up Swedish exports during the economic restructuring transition, dropping corporate taxation and taxation on high income-earners, and switching from anti-unemployment policies to anti-inflationary policies—were exacerbated by international recession, unchecked currency speculation, and a centre-right government led by Carl Bildt (1991–1994), creating the fiscal crisis of the early 1990s.[11]

But Sweden's economy began to deteriorate in the early 1990s. In 1990 the Carlsson cabinet resigned after failing to gain a majority for its economic policy agenda, but was reinstated immediately with a slightly changed agenda.

In 1987, he visited United States President Ronald Reagan at the White House, becoming the first Swedish prime minister to visit a U.S. president since Erlander met John F. Kennedy in 1961.[12]

The Social Democrats lost the elections in 1991, but Carlsson returned to power after the elections in 1994. When the Social Democrats returned to power in 1994, they responded to the fiscal crisis[13] by stabilizing the currency—and by reducing the welfare state and privatizing public services and goods, as governments did in many countries influenced by Milton Friedman, the Chicago Schools of political and economic thought, and the neoliberal movement. As Prime Minister he also carried out a comprehensive reform of the tax system.

After three years in opposition and an election victory in the 1994 elections, Carlsson formed a new government. This government realigned its focus on cleaning up Swedish Government finances, and the task was assigned to the newly appointed Minister of Finance Göran Persson. The ensuing governing period was difficult and it was strongly criticized by trade unions and party members for government service cuts and tax increases that were instituted. On 19 December 1994, Carlsson announced the decision not to recover the wreck of the MS Estonia, or even the bodies of the victims of the disaster.

Carlsson pushed for Sweden to join the European Union, seeing it as necessary for Sweden to strengthen its economy, although other members of his party were skeptical of the idea.[14] After four years of negotiations and a large campaign credited with increasing EU support, a national referendum was held on 13 October 1994, with 83% voter turnout (the highest for a Swedish referendum up to that point), and 52.3% voting to join.[15][16] Sweden joined in January 1995 alongside Austria and Finland.[15]

In August 1995, Ingvar Carlsson announced that he would resign as party leader and Swedish Prime Minister. His successor was long considered to be the then Minister of Equality and Deputy Prime Minister Mona Sahlin. However, due to the so-called Toblerone Affair, she took back her candidacy and also later resigned from the government. On 5 December 1995 the nominating committee proposed the Minister for Finance, Göran Persson, as the new party leader candidate. He was elected on 15 March 1996 at the Social Democratic Party Congress as party leader and on 22 March 1996 he was elected Prime Minister.

• Elgán & Scobbie, Elisabeth & Irene (2015). Historical Dictionary Of Sweden. Rowman & Littlefield Publishers. ISBN 9781442250710.
• Ruin, Olof (1989). Tage Erlander: Serving The Welfare State, 1946-1969. University of Pittsburgh Press. ISBN 9780822976677.