Sweden faces a political impasse after its mainstream centre-left and centre-right blocs virtually tied in an election on Sunday, while the far-right - which neither wants to deal with - made gains on a hardline anti-immigration platform.
With nearly all votes counted yesterday, the ruling centre-left Social Democrats and Greens and their Left Party parliamentary ally had 40.6 percent of the vote, while the opposition centre-right Alliance was on 40.3 percent.
That translates into a single-seat advantage in the 349-member Riksdag.
The Sweden Democrats, a party with white supremacist roots, won 17.6 percent, about 5 percentage points more than four years ago. It was the biggest gain of any party and in line with conventional opinion polls but fell short of the 20-30 percent their leader Jimmie Akesson had predicted.
"Most signs pointed towards the Sweden Democrats taking over the position as the second-biggest party in Sweden. But the expected ... bang did not happen," the liberal Expressen daily said in an opinion piece.
The Sweden Democrats were beaten by Prime Minister Stefan Lofven's Social Democrats by a 10 percentage point margin and eclipsed also by Ulf Kristersson's Moderates, the Alliance's candidate for the premiership.
"In some sense we're happy the Sweden Democrats didn't grow more than they did," Liberal Party lawmaker Allan Widman told Reuters.
The Sweden Democrats' success follows a rise in popularity of other far-right parties in Europe amid growing anxiety over national identity, the effects of globalisation and fears over immigration boosted by conflicts in the Middle East and Africa.
Senior figures in the mainstream parties headed into meetings yesterday to produce a strategy for forming a government. But the process could take weeks and possibly fail, with the Sweden Democrats vowing to sink any cabinet that doesn't give them a say in policy.
“We won't participate in letting through a government which doesn't give us influence," Akesson said on local channel TV4. "On the contrary, we will do what we can to take down any such government."