Sweden Democrats hold threat of budget defeat over PM Lofven

By Johan Sennero STOCKHOLM (Reuters) - The anti-immigration Sweden Democrats said on Thursday they would decide next week whether to back a budget proposed by the opposition, a move that could bring down the minority government after just two months in power. In Sweden, each party in parliament is entitled to propose a budget and the proposal that gathers most support becomes the official finance bill. Two budget proposals are currently in the running, with the Sweden Democrats, which are shunned by all other parties in the Riksdag, holding the balance of power. September's election left the Social Democrats and Greens short of a majority in parliament with the Sweden Democrats the third biggest party. "We will make our decision at our regular parliament group meeting on Tuesday and announce it afterwards", the Sweden Democrats' economic spokesperson, Oscar Sjostedt, told Reuters after a meeting of the parliament's finance committee. Sjostedt said his party was "absolutely ready" to bring down the government but that neither the government's nor an alternative centre-right budget is "strong enough" to vote for on its own merit. Swedish Prime Minister Stefan Lofven said before the meeting that the party was "turning the parliament into a playground". Should the government's budget fail to pass in the Dec. 3 vote, Lofven could rework the finance bill to seek support from the centre-right opposition. But he could also resign and try to form a new government, or call a snap election - something that hasn't happened since 1958. Analysts said the Sweden Democrats had everything to gain by flexing their muscles in public but may fear that bringing down the government could backfire on them. "They would then be responsible for unleashing a government crisis," said Ulf Bjereld, professor of political science at Gothenburg University. "They also risk forcing a new election where they could lose their grip on the balance of power." The budget vote is the first big test for Lofven, a former welder and union leader who became prime minister in October. The Social Democrats won only 31 percent of the national vote, despite widespread unease that Sweden's cradle-to-grave welfare state had been weakened during eight years when the centre-right slashed taxes and sold off state companies. Lofven has underlined that the era of tax cuts is over and his first budget outlines around 25 billion Swedish crowns (2.16 billion pounds) of new spending to boost jobs, education and welfare. However, the measures will be financed by tax hikes, including an income tax rise for higher earners. (Reporting by Johan Sennero; writing by Simon Johnson, editing by Niklas Pollard/Ruth Pitchford)