Long-serving premier fights for political life in Sweden

Goran Persson, one of Europe's longest-serving prime ministers, is fighting for his political future as polls predict a knife-edge result in tomorrow's Swedish elections.

Mr Persson, whose Social Democrats were expected to cruise to victory, has had to fight hard to persuade his supporters to turn out. His party is predicted to win its lowest share of the vote since 1914.

Known in Sweden as "he who decides", Mr Persson's dominance of politics has been challenged by voter fatigue and a campaign that has focused on immigration and tax cuts. With the left in retreat across Europe, the result will be watched to see if a series of centre-right victories can be stemmed.

The next government will also have a bearing on whether Swedes vote to join the euro in a referendum likely to be called next year. Defeat for the Social Democrats, which have ruled Sweden for six of the past seven decades, would be seen as a blow to the prospects of a "yes" vote as the party might be too demoralised to campaign hard for the single currency.

Despite the slump in Social Democrat support, Mr Persson may well return to the office he has held since 1996, albeit as the head of a coalition with the Greens and the Left Party. The election is particularly unpredictable because the Greens must reach a 4 per cent threshold for seats in parliament – something that could be decided by just 1,200 votes.

One clear winner so far has been the opposition Liberals, a small party that used to poll about 4 per cent but which one poll yesterday says is now backed by 13.1 per cent of Swedes. Lars Leijonborg, its leader, ruffled the consensual world of Swedish politics by suggesting that those who apply for Swedish citizenship should pass a language test.

The tenor of the debate has been different from that in nearby Denmark because the Liberals also want more immigration to plug gaps in the labour market and dampen wage inflation. Moreover, while Mr Persson has shed support since rejecting the plans, Liberal gains have also been at the expense of the conservative Moderate Party – their potential partners in a centre-right coalition.

The failure of Bo Lundgren, the Moderates' leader, to hold on to his support throws a potential lifeline to Mr Persson. Mr Lundgren has promised tax cuts to spur economic growth in one of Europe's most heavily taxed countries.

Mr Persson has emphasised his economic record. The Nordic region's largest economy has grown an average of 3.2 per cent since 1998, compared with 2.6 per cent elsewhere in euroland. Unemployment has fallen to 4.9 per cent, compared with 9.3 per cent in Finland, and taxes have been cut to 51.2 per cent of gross domestic product from 52.5 per cent in 2000.