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Last Updated: Monday, 15 September, 2003, 20:04 GMT 21:04 UK
EU regrets Sweden's vote on euro
No supporters hear the first figures in Sweden's euro referendum
The effects of Sweden's no vote will be felt throughout Europe
European Union leaders have expressed regret over Sweden's vote to reject joining the euro at the weekend.

The historically neutral Nordic nation rejected membership of the EU currency by a vote of 56% to 42%.

Margot Wallstrom, Sweden's EU commissioner, warned the country would face an "economic and political price for remaining outside".

The vote took place as scheduled despite the murder of Foreign Minister Anna Lindh last week.

Among the country's most popular pro-euro campaigners, she was stabbed to death in a Stockholm department store days before the vote - but her death apparently did not create the sympathy vote for the euro that some had expected.

Police have recovered DNA from a baseball cap believed to have been worn by the killer, but no-one has been arrested in connection with the murder.

The pro-euro Swedish Prime Minister, Goran Persson said the result - on a turnout of 81% - was a clear victory for opponents of Swedish Euro membership.

The BBC's James Coomarasamy says one of Europe's most dynamic economies will now remain outside the euro zone for the foreseeable future.

He adds that this will ensure that the EU's flagship unifying economic project will continue to be a source of division.

Swedish voters were the first to hold a referendum on the euro since the single currency went into circulation in 2002 in 12 of 15 EU countries.

'Not over'

Italian Foreign Minister Franco Frattini - whose country is currently president of the EU - said Sweden's vote would not end European efforts to persuade it to join the euro.

The fear of being governed by unelected cronies from other countries have helped them make a rational choice
Chris Snell, UK

"We must work to convince [Swedish] citizens that Europe is a great opportunity and that there is no risk of loss of identity," he said.

In a statement, the European Commission said the world's second currency was still a young one, and that its benefits were not yet clear to all parts of the European Union.

European Commission President Romano Prodi said Sweden's decision had been based on political not economic factors:

"I interpret this referendum as some sort of fear by the Swedish people concerning their identity, the future of their economy - not even just that - more the future of their society," he told the BBC.

"I think this is not an economic decision, it is more political... the euro remains strong, there is no problem," he added.

Graham Watson, the leader of the Liberal Democrats in the European parliament, warned that Sweden's "continued self-exclusion from the euro will bring a crushing loss of investment and political influence".

The Swedish crown's value dipped briefly on the result, but returned to pre-vote levels on Monday.

Sweden's economy is doing better at the moment than that of the euro-zone, and traders welcomed the end of uncertainty about the future of the country's currency.

Opponents cheer

Opponents of the euro in Britain and Denmark, the other two EU countries outside the euro zone, have already welcomed the result.

IN: Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, The Netherlands, Portugal, Spain
OUT: Denmark, Sweden, UK
Danish Prime Minister Anders Fogh Rasmussen, who aims to lead his country into the euro zone, said the Swedish result had "no bearing on our attitude towards the single currency".

German Chancellor Gerhard Schroeder deplored the result, but said "the door was not closed and that the possibility of a later Swedish euro entry remained".

In Britain, opponents of joining the single currency said Swedish voters had recognised serious economic problems inside the euro zone and feared losing control of their economy.

A member of the Britain's opposition Conservatives, Michael Ancram, said the Swedish decision reinforced his party's view that joining the euro was not in Britain's economic or political interest.

The Swedish outcome "gives the lie to those who've been saying for years, 'oh, joining the euro is inevitable, and only the British are creating any problems about it'."

Some Swedish business leaders say they will demand compensation from the government for the income lost as a result of staying outside the euro zone.

Mr Persson has said another euro referendum is now not likely to be held for another 10 years.

The BBC's Stephen Sackur
"There is a real danger of European disunion"

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