EU referendum: Could Brexit lead to Sweden 'Swexit'?

Max Hedgren fears the impact of Brexit on the markets

Sweden is Britain's closest ally when it comes to voting on European policies and staying out of the eurozone. So how might the UK's Nordic neighbour react to Brexit?

On Friday morning, as the UK digests the results of the EU referendum, Swedes will be tucking into pickled herring and dancing around maypoles as part of their annual midsummer festivities.

But while Sweden's biggest public holiday is typically a time when locals flock to the countryside to enjoy a digital detox, plenty in the nation's business and politics communities will be glued to their smartphones over breakfast to find out if Britons have chosen to vote out.

"To have Britain in the European Union right now brings a lot of stability. And if they leave, it will have a huge impact," says Max Hedgren, 27, a recruitment consultant at a finance company in Stockholm.

Sipping on a craft British beer in the Kungsholmen district, he says the real possibility the UK might exit the union is already causing strong jitters among his friends and colleagues.

"I've been following it a lot in the news, and I follow the stock market as well," he says.

"I think it's going to affect us financially, in our private lives, in our jobs."

Wallstrom: Brexit could lead to EU break-up

Follow the latest on the BBC's EU referendum live page

Would Brexit make Putin happy?

Germany conflicted on how to handle Brexit

Multiple polls suggest Swedes are the most convinced in Europe that a British departure would hurt the EU.

In one study for the US-based Pew Research centre, nine out of 10 people questioned concluded it would be "a bad thing" for the bloc.

As well as concerns for the general stability of Europe's financial markets, plenty are worried about the future business relationship between Sweden and the UK, where more than 100 Swedish companies are based.

Patrik Arnesson believes Brexit would deter start-up investment

Per Tryding, deputy chief executive of the Chamber of Commerce and Industry of Southern Sweden, has repeatedly warned that if the UK leaves the union, it would trigger a crisis of confidence in a member state that Swedes frequently "hold up as a role model".

"Swedes are a little bit in love with the UK," he says.

"But now the rules of the game will be unknown.

"What are the real conditions if we do business with or invest in Britain in future?

"That insecurity will make people shy away from investment."

Strong words have also emerged from Sweden's start-up scene, which uses the UK both as a neighbouring talent pool and as a key launch pad outside the Nordics.

Patrik Arnesson, chief executive and co-founder of Gothenburg-based app company Football Addicts, says: "It's fair to say that most of the major European start-ups I talk to see the UK as the next logical step in their international expansion - but if a Brexit occurred, it would likely have a deterring effect on these sorts of plans."

Back in Kungsholmen's bar district, it is clear that voters from both ends of the political spectrum are already absorbing the different arguments.

One woman, who asks to be known only as Maria, says: "It's not a very popular thing to say here in Sweden, but I do think we've taken in too many people and maybe leaving the EU could be a solution."

Maria Grundstrom is worried about racism

But student Maria Grundstrom says that is an attitude that worries many of her pro-European friends.

"The right don't want to be in the EU because they don't want immigrants," she says.

"Today it's an open country - but if Brexit wins, it's going to be like a statement for everyone who is on the same page as them to have a clear sign to go forward in Sweden and think, 'Yeah, maybe we are going to leave the EU too.'

"The only group that benefits is right, racist parties."

Ragnar Cleveman believes big business gains most from the EU

Meanwhile, student Ragnar Cleveman, 25, says there are completely different reasons he would also back a fresh referendum in his home country.

"It's all just companies and big corporations getting big money and all of these back-room treaties that none of the EU population is involved with," he says.

"If the UK leaves, that's a big thing.

"But, all in all, maybe we shouldn't have been in it from the beginning."

Main ally

From a political standpoint, Sweden will lose its main ally in the European Union if Britain goes, with the two countries sharing the same perspective in almost 90% of votes.

Some commentators have even argued that Sweden, which like the UK has retained its own currency, could face heavy pressure to drop the kronor for the euro in the event of a Brexit, a possibility that Swedish ministers have been quick to dismiss.

Margot Wallstrom said if the UK voted to leave, other countries could follow

Meanwhile, despite strong public support for the status quo, there is growing concern that ordinary Swedes might not be so keen on continuing their love affair with the EU, if the UK chooses to divorce itself from the 28-member bloc.

A recent poll by TNS Sifo suggested that only 32% of Swedes would want to remain in the EU if Britain left, with 36% in favour of a so-called Swexit.

Sweden's Social Democrat EU Minister Ann Linde told journalists in Stockholm on Tuesday that she was worried Brexit might rewind her country to the arguments of the early 1990s, when Swedes had their own referendum on joining the union.

"It will be like opening up the Yes and No debate again," she said.

The Nordic nation's Foreign Minister, Margot Wallstrom, has even gone as far as suggesting Brexit could break up the entire union.

"That might affect other EU member states that will say:, 'Well, if they can leave, maybe we should also have referendums, and maybe we should also leave,'" she told the BBC's This Week's World programme.

With all of Sweden's mainstream centre-right opposition parties also remaining in favour of Sweden's membership, it is perhaps the far right in the Scandinavian country that may stand to gain the most if the Brits go through with Brexit.

The anti-immigration Sweden Democrats polled 12.9% in Sweden's 2014 election, and saw their support rise to about 20% as Sweden took in a record 163,000 asylum seekers last year.

Jimmie Akesson wants Sweden to become a "sovereign state again"

The party's leader, Jimmie Akesson, is already a strong critic of freedom of movement within the EU and has repeatedly called for Sweden to "become a sovereign state again".

"I really hope we get the opportunity to hold a referendum in Sweden eventually," he said in a recent televised leadership debate on Swedish public broadcaster SVT.

"I see nothing negative about leaving this supranational European Union."

However, despite Swexit chatter already creeping into the headlines in Sweden, both the Social Democrat-Green government and the largest centre-right opposition party, the Moderates, are adamant they have no desire for Sweden to hold a referendum any time soon.

"Even if a few politicians who favour withdrawal feel they have gained support, there is a strong majority in favour of EU membership," said Anne Linde.

"The EU is beneficial for Sweden."