Stefan Löfven's party received 28.4% of the votes, a strong result for a Social Democratic party in government in today's Europe.

First I hear the drums. Then red flags and banners appear at the corner leading up to Kungsgatan, a central street in Stockholm. A brass orchestra follows, starting to play The Internationale. In the front row of the May 1 demonstration marches Social Democratic party leader and Swedish prime minister Stefan Löfven, together with his wife Ulla. Activists follow under red banners. Most messages on the placards they carry are variations of the official party message: "Together against uncertainty and fear". But some demonstrators are also arguing for a more liberal migration policy after the political leadership´s U-turn on the issue in 2015.

Soon, the demonstrators have passed by, leaving the street empty. Already? A sign of a Social Democracy in crisis, in a country where the party once held power for 44 successive years? This was the narrative in May, as well as in the run-up to the Swedish elections this Sunday.

International media also reported extensively on immigration, fear of crime and challenges to the welfare state. This is a biased picture. Many parts of Swedish society are developing well, and Sweden is ranked among the top countries when it comes to issues such as quality of life, gender equality and innovation.

But yes, there are challenges when Sweden is rapidly changing. One reason for the rise of the far-right Sweden Democrats is that other parties have disregarded such problems for too long.

Segregation and income inequality have grown. The risk of poverty increased drastically in connection with the 2008 financial crises and cut-backs on social welfare by the former centre-right government. This is particularly evident in the areas labelled as "especially vulnerable", many of them suburbs to major cities.

When Sweden opened its doors for 163,000 asylum seekers in 2015, they often arrived in smaller cities where there were not enough teachers, social workers and dentists. The result: crowded schools, longer queues to the dentist, and so on. A number of spectacular shootings in gang fights over drugs have contributed to feelings of uncertainty, although Sweden is in general still a safe country.

During the last four years, Sweden´s population has grown by almost half a million people, quite a lot compared to a total population of about ten million. The coalition government between Social Democrats and the Green Party has started to invest more in social welfare and the integration of immigrants, but too late and too little to fully regain voters´ confidence.

Still, the Social Democrats did not perform as badly in the elections as opinion polls predicted. Actually, Stefan Löfven´s party received 28.4% of the votes, a strong result for a Social Democratic party in government in today´s Europe. Another story needs to be told, as an alternative to simplified narratives.

A setback for the centre-right

Swedish support for the welfare state is still strong. The biggest loser in the election is the liberal-conservative Moderate party. For eight years (2006-2014), party chairman Fredrik Reinfeldt was prime minister. The centre-right government was based on the four-party Alliance for Sweden, including Moderates, Liberals, Christian Democrats and the Centre Party. With Reinfeldt as party chairman, the Moderates were successful, winning 30% of the votes in the 2010 election. Now, new party leader Ulf Kristersson has to reflect on an election result of only 19.8%.

The Moderates have lost many voters to the Sweden Democrats. Fredrik Reinfeldts "open your hearts"-policy towards refugees has lately been much criticised within the party, but apparently the tougher line taken by Ulf Kristersson has not convinced those who already left for the Sweden Democrats.

Other centre-right parties fared better. The Centre Party´s charismatic leader Annie Lööf has been able to combine support from traditional rural areas with attracting voters in the big cities, resulting in an increase to 8.6% of votes. Another young party leader, Ebba Busch Thor, managed to lead her Christian Democratic party to a 6.4% result, contrary to widespread expectations that the party could fall for the 4%-hurdle to parliament. One explanation could be the party´s strong stance against multiculturalism, attracting some voters that would otherwise have gone to the Sweden Democrats. The Liberals' result was almost unchanged from the 2014 elections, getting 5.5% of votes.

The success of the Left Party is also worth noting, reaching 7.9%. While the Social Democratic leadership has been careful not to antagonise middle-class voters by raising property taxes for example, the Left Party has attracted voters looking for more classic labour movement policies. The party leader Jonas Sjöstedt has also had the advantage of not having to compromise on issues such as migration, while at the same time being able to promote social reforms through budget cooperation with the government in Parliament.

In contrast, the Green Party suffered from being in government and having to agree to tougher migration policy, contrary to strongly held opinions within the party. This summer´s heat wave brought climate change to the forefront of the election campaign, and might have saved the Green Party from leaving Parliament. Now the party has got 4.3% of the votes.

Lessons for centre-left parties

The election result is certainly a historic low for the Social Democrats, but not as bad as many expected. During the election campaign, party activists talked to more than 1.5 million voters, showing that there is still a strong local organisation. Together the red-green parties haven´t lost that much support since the 2014 elections (then 43.6% now 40.6%)

However, the rise of the Sweden Democrats has changed the political landscape. For example, there is now a majority in Parliament for weakening labour laws.

What lessons can be learned for progressive political parties?

In the elections, the Social Democrats lost traditional core voters among workers and outside the major cities. Apparently, hunting middle-class voters in big cities is not enough. As has been discussed in the European debate, there are certainly limits to Tony Blair´s "Third Way" policies.

The Swedish example also shows the risk of austerity policies when not strictly necessary. Since the financial crises in the 1990s, there has been a strong momentum to reducing public debt, something Social Democratic governments have been successful in doing. Now Sweden has an internationally low level of debt, but still Stefan Löfven´s government kept to a restrictive budget policy in spite of the rapid growth of population linked to immigration. As the blue-collar trade union confederation LO has underlined, there is a great need for more investment.

Another lesson is that party leaderships need to listen more carefully. In the Swedish case as well as elsewhere, a decrease in party membership has coincided with a rapid growth of professional political communicators. The views of the grassroots have not reached party leaderships with sufficient impact, taking a high toll particularly on the Social Democratic party. There is a great risk in not describing reality as citizens - in particular workers - see it.

After losing power in 2006, the Social Democratic party has changed leaders more frequently than in previous decades. Intense fights over a new leadership were so destructive for the party that once there was consensus on Stefan Löfven as party chairman in 2012, internal debate almost ceased in order not to undermine the new leader. This has contributed to a lack of political and ideological renewal.

Another, less-discussed factor is the influence of PR-companies, trying to influence policy without disclosing their customers. Sweden has correctly been described as naïve for not requiring transparency and cool-off periods as in other countries. There have been a number of scandals, for example when the media revealed in 2010 that well-known Social Democrats were participating in a campaign financed by the Confederation of Swedish Enterprise to make the party more business-friendly. Such interests have also aggravated leadership conflicts in the Social Democratic party. One lesson for centre-left parties is to have strict policies limiting possible conflicts of interest.

So what now?

Final results are due later this week. As it seems today, there is no clear majority in parliament for any likely government coalition of parties. Many foresee a long political process, perhaps a stalemate leading to calls in November for a new election. In that situation, old truths might no longer hold. As Liberal leader Jan Björklund has stated, then there might actually be a new government across old fence lines, perhaps bringing together Social Democrats, Greens, Liberals and the Centre Party.

In conclusion: Yes, the Swedish story is partly similar to other parts of Europe. Right-wing populism is on the rise, in this case a party with neo-Nazi roots. There has been a long-term trend of decline for the Social Democrats. But there are also differences.

The Swedish model is challenged, but still very much alive. As before, there is a broad consensus on the basic elements of the social welfare system. Trade unions are still strong. Together with other progressive forces and with better centre-left policies, they can be a decisive force in reducing support for right-wing populism.