Sweden Votes to Retain Krona

STOCKHOLM, Sweden -- Sweden decisively rejected the European Union's single currency, defying expectations of a late surge of sympathy votes for the pro-euro government after the murder of Foreign Minister Anna Lindh.

"No" campaigners hailed Sunday's referendum as a grass-roots victory to preserve a welfare state and a way of life that, according to the United Nations, has made Sweden one of the best countries in the world to live in.

But the European Commission, big business and Swedish Prime Minister Goran Persson warned Swedes that they could be frozen out of EU decision-making after spurning the currency used in 12 nations. On Monday investors were expected to watch the Swedish krona in markets that had widely expected a rejection of the euro.

Economist John Madsen at Nykredit said he expected the krona to fall 3 to 4 percent against the single currency.

The "no" campaign carried the vote by a resounding 56-42 percent margin. A wave of sympathy "yes" votes had been expected when Lindh, a fervent pro-euro campaigner, died Thursday after being stabbed by an unidentified man. That wave either did not materialize or was not big enough to upset the long-forecast result.

"In the long term we will have worse opportunities than we would otherwise have had," Social Democrat leader Persson said. Asked if Sweden would lose influence by staying outside the euro zone along with fellow EU members Britain and Denmark, EC President Romano Prodi told Swedish Television: "Certainly, yes."

Sweden's rejection is the latest rebuff from voters of the few EU member states that have risked referendums on EU issues -- the Danes and the Irish have held up key EU treaties with "no" votes. But the result contrasted with a solid "yes" to EU membership on Sunday in Estonia, one of 10 countries hoping to join the bloc in 2004.

The "no" side, ahead in polls since April, had told Swedes that the euro would raise prices and cut funds for the cradle-to-grave welfare system that helped Sweden to the No. 3 spot in the UN's 2003 list of the best countries in which to live.

"The people have put their foot down and made it clear that democracy comes from below, not from above," said Ulla Hoffman, leader of the Left Party, which fought a grass-roots campaign against the euro with the Greens and government dissidents.

The chairman of Sweden's flagship telecommunications giant Ericsson, Michael Treschow, said the "big losers will be companies."

The krona fell to 9.18-9.19 per euro on thin weekend volumes, compared with Friday's close of 9.11, dealers in Stockholm said.