Sweden's Turn Left Could Deal A Blow To European Austerity

Sweden's Prime minister and leader of the Moderate Party, Fredrik Reinfeldt speaks during a rally with his coalition partners
Sweden's Prime minister and leader of the Moderate Party, Fredrik Reinfeldt speaks during a rally with his coalition partners, leader of the Liberal People's Party, Jan Bjoerklund, leader of the Centre Party, Annie Loeoef and leader of the Christian Democrats Party, Goeran Haegglund, at Norrmalmstorg on September 13, 2014 in Stockholm.AFP PHOTO/JONATHAN NACKSTRAND (Photo credit should read JONATHAN NACKSTRAND/AFP/Getty Images)

Austerity isn't just out of fashion in the U.S. anymore. If Sweden elects a center-left government, as it is projected to do on Sunday, the country could deliver a rare rebuke to fiscal belt tightening even as leaders across Europe continue to set strict monetary policy.

Since it took power in 2006, Swedish Prime Minister Fredrik Reinfeldt's center-right coalition has instituted dramatic income and corporate tax cuts, trimmed welfare benefits, rolled back labor laws and privatized state-owned companies, particularly in the areas of education and health care. The result -- GDP growth of 12.6 percent, a rise in disposable income and a sizable budget surplus -- stands in stark contrast to the rest of Europe, which continues to face economic turmoil brought on by the 2008 recession.

Yet Swedes seem ready for a change. Polls conducted Friday indicate that the Scandinavian country's opposition parties, led by the Social Democrats, lead the ruling coalition by 6 to 8 percentage points.

Why the voters' change of heart? Concern that pro-market reforms are tearing into the nation's famed social safety net, a point of great national pride, appears to be the primary reason.

"They have sold out our country," one Stockholm resident said of Reinfeldt's government, according to the Associated Press. "The rich are getting richer and things are getting worse for the poor."

Income inequality is on the rise, unemployment hovers stubbornly high around 8 percent, and the nation's GDP growth has slowed. Moreover, many Swedes aren't particularly taken with the ruling party's policy on privatizing schools and hospitals -- an issue that has come to the forefront with recent media reports on overcrowded hospitals and people mistreated in elder care.

Sweden's election may not actually be the first sign of changing winds in Europe. In a surprise decision, the European Central Bank announced last week that it was cutting its main interest rate and beginning a round of quantitative easing in hopes of boosting economic growth.