SWEDEN’S centre-right alliance won a narrow general election victory to end 12 years of Social Democrat rule last night after a campaign dominated by the future direction of Europe’s most generous welfare state.

Fredrik Reinfeldt, the youthful right-wing leader likened to David Cameron for the way he dropped traditional policies to modernise his party, saw off the veteran Göran Persson, Europe’s second longest- serving Prime Minister.

Mr Reinfeldt, 41, based his appeal around reforming rather than overhauling Sweden’s social welfare system, with plans to cut the sickness benefits that account for 16 per cent of public spending.

His attack on Sweden’s hidden unemployment among the long-term sick, the early retired and those on pointless government schemes struck a chord with younger Swedes struggling to find work.

Mr Reinfeldt’s campaign was watched closely by centre-right parties across Europe, who will have been buoyed by the way that he beat the left on their home territory of popular state-funded health, education and social care services.

He also united the four-party right-wing Alliance for Sweden and, taking a lesson from Tony Blair, restyled his own party as the “new” Moderates, seeing its share of vote soar from 15.2 per cent in 2002 to 26 per cent. The Social Democrats saw their share shrink from 39.8 to 35.4 per cent. With almost all votes counted, the Riksdag was expected to be Mr Reinfeldt’s by 178 seats to 171.

In his victory speech, Mr Reinfeldt echoed Mr Blair in 1997 when he declared: “We campaigned as the new Moderates, we won as the new Moderates and together with our alliance partners we will rule Sweden as the new Moderates . . . I will govern Sweden as a representative for all Sweden.”

Some, however, interpreted the switch of votes to the Right as a simple desire for new blood. Anders Björk, a former deputy speaker of the Riksdag, said: “After 12 years of the same Government, people want a change. It is a mental thing that does not have much to do with politics.”

Mr Reinfeldt entered politics in his twenties through the youth wing of the Moderate party. He first entered parliament in 1991, the last time a conservative government won an election. His shaven head, trim figure and dark brown eyes are in stark contrast to Mr Persson’s beefy frame.

Mr Persson, 57, had struggled during the campaign to throw off the image of a tired administration with little new to offer apart from more high taxes. After conceding defeat, he announced his intention to stand down as party leader next March. Mr Persson had raised fears that the so-called Swedish Model, built on the back of his Government’s high-tax regime, would be dismantled by the Right, but Mr Reinfeldt insisted that he would simply repair and modernise it. He also promised income tax and property tax cuts and a dose of privatisation.

The Social Democrats had governed Sweden in all but nine of the past seventy-four years. Mr Persson told dejected supporters: “We have lost the election, but we are not a defeated party.

“We are in a minority but we will immediately organise to be a powerful opposition. We will not accept the right-wing welfare shifts. We will fight back.

Times Recommends

• UN may halt 400-year-old 'freedom of the seas'
• Where the Rosetta belongs can’t be set in stone
• Gas deal on hold, but Ukraine may pay in the end