Sweden’s ruling Social Democrats won a third term in Sunday’s national elections after a close race against the centre-right opposition.

Election results showed Swedes had voted to keep the industrialised world’s highest taxes to pay for a generous welfare state, rather than opt for tax cuts and privatisation offered by the opposition.

With all the postal ballots counted, Swedish Prime Minister Goeran Persson’s Social Democrats and his left-wing partners won an absolute majority, ending a string of victories across Europe for far-right parties in past months.

"This is an important moment for me – to win an election and go against a European trend, to win so clearly when in government", Goeran Persson said, as polls pointed to a clear victory for the Social Democrats. "Next week our German comrades can follow us," he said, referring to the German Social Democrats' battle to win the federal elections this coming weekend.

The only Swedish centre-right party to gain noticeably in votes was the Liberal Party, which nearly tripled its share of votes by making immigration a central election theme, including a programme calling for immigrants to pass a language test before gaining citizenship. However, the centre-right party failed to hurdle the 4 per cent threshold needed for entry into parliament.

Absolute majority

Together with the ex-communist Party of the Left and the Greens, the Social Democrats won over 53 per cent of the vote and gained some 191 seats in parliament.

The victory was a personal triumph for Persson, whose party scored their lowest ever results in the last elections four years ago, when it reached only 36 per cent.

Persson said on Sunday he was "happy and moved" by the surge in votes but acknowledged the new term would have its challenges: "We know we have four hard years of taking responsibility for Sweden in front of us. This will demand a lot of humility and a lot of co-operation".

On Sunday, Persson promised to work with Sweden’s powerful trade unions in pursuit of greater equality. "We will work for four more years to make Sweden more just and more equal and we will make sure that we also have a voice internationally and for international solidarity", he said.

It will now be up to the Prime Minister to shepherd the country through a referendum on the adoption of the euro. This may prove a difficult task, as both coalition partners, the Greens and the Left, are against joining the euro.

But Persson, a strong euro supporter, said he will invite the other party leaders to agree on a referendum date, possibly in spring or autumn next year. Polls show a narrow majority of Swedes are in favour of joining the euro.