First premiership (1986–1991) (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 and party leader. In the weeks following the assassination, Carlsson garnered record-high approval ratings.
Carlsson's first government was formed on 12 March of that year. 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. However, 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 April 1986, Carlsson visited the
Soviet Union and its leader
Mikhail Gorbachev, as part of an effort to ease
Swedish–Soviet relations. The trip had been planned by Palme, but was undertaken by Carlsson instead due to the assassination. 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. The
Chernobyl disaster in
Soviet Ukraine took place in 1986, and Sweden was the first country to alert the world of the nuclear accident. The accident had negative repercussions for Sweden, with the country losing an estimated $144 million in ruined food, the livelihood of 15,000 nomadic Swedish
Sámis, and various forests, crops, and wildlife were contaminated with radiation. Carlsson had previously supported
Sweden's nuclear power program, The
elections in 1994 saw a turnaround for the Social Democrats. Although the Moderates maintained their 80 seats and saw a slight percentage increase, all of the other right-wing coalition partners lost seats, and New Democracy fell below the 4% threshold. The Social Democrats won 23 new seats and saw their percentage increase to 45%. As a result, the Social Democrats returned to power, with Carlsson again becoming prime minister and
a new government. 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. Bildt's government had significantly cut taxes, although they were still considered high. In his second government, Carlsson reduced some welfare benefits and halved the value-added food tax. However, he also raised the top marginal income tax rates on the wealthiest, and tax revenue increased as the decade progressed. 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 sceptical of the idea. 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. Sweden joined in January 1995 alongside
Austria and
Finland. After joining, Carlsson was critical of the lack of gender diversity in EU institutions, stating in a ministerial meeting that "we don't do it this way in Sweden".
Sweden held an election for the
European Parliament in September 1995. The pro-European Social Democrats received only 28% of the vote, while the
Eurosceptic Left Party and
Green Party together won 30%. The Social Democrats' poor showing was seen as a major blow to Carlsson. 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. == Later life ==