Prime Minister Ingvar Carlsson, whose party created Sweden's welfare state, resigned Monday after a taxpayers' revolt at the polls handed conservatives a parliamentary victory.
Parliament Speaker Thage G. Peterson responded by appointing Carlsson head of a caretaker government until conservative leader Carl Bildt can form an administration.In elections Sunday, Carlsson's Social Democratic Party suffered its worst defeat in nearly 60 years as voters rejected policies that have resulted in an income tax of 60 percent and made every third worker a public employee.
The Social Democrats lost 19 seats in the 349-member Riksdag, or parliament, while the opposition won 171 seats, four short of a majority, according to unofficial final results.
"We cannot continue to govern with such a loss," Carlsson said.
The Social Democrats, and the formerly communist Left Party that allowed them to rule as a minority government since 1982, had a total of 153 seats.
The socialist parties collected 42.7 percent of the 5.48 million votes to 47.1 for the non-socialist alliance.
The Greens, who entered parliament for the first time in 1988, were knocked out with less than 4 percent of the vote as environmental issues took a back seat to worries over rising unemployment, Western Europe's highest annual inflation, and the world's highest tax rates.
The Social Democrats succeeded, to a large extent, in their goal of creating a society where no one is poor, everyone has adequate housing, education and health care - and where income is redistributed for the welfare of society as a whole.
But the system has grown more expensive over the years, and younger Swedes have begun to object to bureaucratic inefficiency and lack of choice in such matters as child care and doctors.
The Social Democrats offered expanded social services and stability to address economic problems.