Sweden votes with center-left opposition headed for win

Jonathan Nackstrand | AFP | Getty Images

Sweden's center-left opposition appeared headed for a narrow election victory on Sunday, according to polls, on a platform of increased spending on job schemes, healthcare and schools after 8 years of tax cuts.

The Social Democrats, the largest single party polling around 30 percent, hope to rule with the Green Party. But even if opinion polls are born out, they are likely to rely on winning support from the Left Party and possibly smaller parties in the current center-right government to form a government.

Negotiations could be hard and protracted.

Many Swedes are worried that reforms under the center-right Alliance government have gone too far, weakening healthcare, allowing business to profit from schools at the expense of results and dividing a nation that has prided itself on the equality into haves and have nots.

Read MoreSwedish household debt soars as poll nears

But a splintered opposition has failed to tap into voter unease and is unlikely to win a clear majority in parliament. The anti-immigration Sweden Democrats may hold the balance of power but other parties refuse to work with them.

"All the signs point to the fact that the center-left are going to be bigger than the Alliance, but that they won't get a majority," Mikael Sundstrom, a political scientist at Lund University, said.

"It is going to be a very difficult situation for them."

Unemployment

Widely admired for its strong economy, stable government and liberal attitude to immigration, Sweden nevertheless faces significant challenges which a weak government will struggle to deal with.

Unemployment is high at eight percent, hitting immigrants and young people especially, and a potential housing bubble threatens economic stability. The rise of the far-right points to a society starting to question its role as what Prime Minister Fredrik Reinfeldt calls "a humanitarian superpower."

The Sweden Democrats, who want to cut the number of asylum seekers by 90 percent, are set to double their share of the vote to around 10 percent.

Read MoreCan Sweden avert 'Nordic Japan' fate?

The Social Democrats plan to spend around 40 billion crowns ($5.6 billion) to improve education, create jobs and strengthen welfare.

The Left Party - formerly Sweden's communist party - wants to hike income and company taxes and exclude profit-making businesses from schools and welfare, policies that the Social Democrats and Greens reject.

The Liberal and Centre parties, the two smallest in the current government, have snubbed Social Democrat leader Stefan Lofven's call for a broad-based government, raising the threat of deadlock after the election or in the worst case scenario a new vote.

Polls show the Social Democrats, Greens and Left parties with around 46 percent of the vote to the Alliance's 41 percent.