Sweden's voters have struck a profound blow to Europe's single currency, giving a vote of no confidence in the euro and making early Danish and UK membership unlikely.
The result underlines the difficulty pro-Europeans face in winning any popular vote against opponents who portray their cause as elitist and remote from the voters. Not even the sympathy factor after the murder of the country's Foreign Minister and pro-euro campaigner Anna Lindh could swing the result.
At their weekend meeting in Italy, EU finance ministers urged Sweden to join the single currency and it is clear why they in Brussels were so keen for a "yes".
The eurozone needs economies like the Swedes' to bolster its credibility. The 12-nation bloc is facing stagnation and mounting budget deficits while Sweden is a model of Scandinavian efficiency. With growth at 2 per cent and unemployment at 4 per cent, Sweden outperforms the big eurozone economies. France is to break the euro's budget deficit ceiling of 3 per cent of GDP for three years in a row; Sweden has a surplus of some 1.4 per cent.
Admitting the Swedish kroner would have restored some faith in the euro when its rulebook, the so-called Stability and Growth Pact, is in disarray. But, with Swedish membership killed off for some years, the result will have a domino effect. Denmark's government has made clear it would like a second referendum to overturn the result of the vote in 2000 which rejected the euro. That prospect is now significantly further off. In turn, Britain will face less pressure to join since it will, for some years at least, have the company of two Scandinavian nations in the EU's outer economic tier.
Next to join the bloc may a few of the former Communist nations due to join the EU next year, but the addition of currencies such as the Polish zloty may not be so welcome to foreign exchange markets as the kroner.
Yesterday's vote showed how difficult it is to win a referendum for European integration. Recently the pro-European side has had a miserable run. Votes on the euro in Denmark three years ago, and on the Nice Treaty in Ireland in 2001 were both lost (the latter reversed by a second referendum the following year). None of the 12 nations that joined the euro consulted their people directly except France, which voted narrowly in favour of the Maastricht treaty.
In Sweden, special factors made the pro-euro case particularly difficult. Historically, Swedes have been aloof from international organisations, prizing the neutrality that kept them out of the world wars of the last century. The vote to join the EU in 1994 was won only by a narrow margin. The euro vote shows the fragility of support for engagement in Europe and how many Swedes are convinced they do things better than the EU. Many fear joining the euro would undermine their famously generous welfare state.
The "yes" campaign was at times ham-fisted, but it deployed resources several times greater than the "no" side and had the backing of most of the political and media establishment in Sweden. Yet even this was not enough.