On 3 December 2014, the proposed budget of the Löfven Cabinet failed in the Riksdag due to the Sweden Democrats siding with the centre-right opposition Alliance's budget. Prime Minister Löfven announced plans to call for fresh elections in March 2015. However, on 27 December, the early election was cancelled after the governing parties signed an agreement with the four parties in the opposition Alliance. Under the "Decemberöverenskommelsen", the six parties agreed not to vote against a budget proposed by the government for the next eight years. The December Agreement fell in October 2015 when the Christian Democrats decided to leave it.
Policy
The government announced the outline of its policy on 3 October 2014. Plans included reducing unemployment to the lowest level in the EU by 2020, reducing deficits, phasing out nuclear energy, reducing emissions from fossil fuels and having a more socially liberal asylum policy. In its statement the government identified as feminist. It aims to increase gender equality, reduce the gender wage gap and introduce quota if female representation on governing boards is below 40% by 2016. It also promised to increase penalties for aggravated sexual offences. The government's foreign policy will consist of pursuing membership of the Security Council and remaining outside NATO. The government said it opposes ISIL. It was the first EU government to recognise the State of Palestine in view to "facilitate a peace agreement by making the parties less unequal", resulting in that Israel the same day recalled its ambassador for consultations.
2018-19 government formation
Prime Minister Stefan Löfven lost the motion of no confidence against him and his cabinet on 25 September 2018. 142 members of parliament voted for retaining Löfven's cabinet while 204 voted against. Löfven stated in a subsequent press conference that he would not be stepping down as Social Democratic party leader and that he would be willing to partake in talks regarding the formation of a new government, but insisted that it is ultimately up to the Speaker of the Riksdag. Löfven also stated that he finds it "completely unbelievable that the Alliance could ever form a government", if they intend on keeping their promise of not co-operating with the right-wing Sweden Democrats. Löfven and his cabinet continued to serve as a caretaker government until Löfven was reelected as Prime Minister in January 2019, 131 days after the 2018 election. 115 MPs voted to re-elect Löfven as Prime MInister, while 153 voted against him and 77 MPs, representing the Centre Party, Liberals and the Left, abstained. Since the Swedish Prime Minister is elected through negative parliamentarism, a candidate can be elected to the office if no more than 175 MPs vote against him/her.