This article from The American Prospect says that recent electoral victories by the center-right in Scandinavia may not indicate the sharp turn to the right and the clear rejection of the welfare state that many have claimed. It is not clear whether "the welfare state swallowed the center-right, or the center-right swallowed the welfare state":
Centered Right How Scandanavia's neoliberal parties came to love the welfare state, by Ulrik Jørstad Gade, American Prospect: Something odd is happening in Scandinavian politics. Or rather, something normal has stopped happening. Everybody knows that for the better part of a century, social democrats have been building ... welfare states in Scandinavia. The news is that economic liberals ("liberals" in the classical, continental sense of the term) have basically ceased to attack them. In fact, Scandinavia’s center-right parties now actively embrace the welfare state. And suddenly -- and not coincidentally -- voters like them.
For generations, political power in Scandinavia has rested overwhelmingly with the labor-oriented social democrats, interrupted only by brief periods of center-right government. But last week, Danish Prime Minister Anders Fogh Rasmussen, who took office in 2001, achieved the status of longest-sitting prime minister ever from Venstre, the traditionally economically liberal party of Denmark. ... And as of yet, according to polls, Rasmussen has nothing to fear from the center-left opposition.
Meanwhile in Sweden, whose political history is even more solidly social democratic than Denmark’s, 41-year-old Fredrik Reinfeldt just led the conservative party Moderaterna to its best election result since 1928, securing a narrow victory for a center-right coalition. Sweden’s economy is doing great after 12 years of social democratic leadership, but there has been growing dissatisfaction with the quality of some welfare services, such as the public health system, senior, and child care. That is, the situation is much like in Denmark in 2001. (One notable exception is that Rasmussen rode a wave of xenophobia and populist nationalism ... Immigration issues have been remarkably absent from Sweden’s national political debate in this race.)
So what is happening? How does the center-right conquer the center? ... [A]n essential part of the answer is that these parties stopped railing against the welfare state. Instead, they befriended the beast, and the electorate that loves it. Parties making up center-right coalitions in Denmark and Sweden now offer to do almost exactly what the social democrats do, only better. They promise better welfare and more individual choice, all at lower costs -- simply by managing the welfare state more efficiently. The result ... has been to crowd out the democratic socialists from the welfare-loving center of middle-class voters.
To achieve this, right-wing liberals have had to work hard to distance themselves from the neoliberal, small-government ideas they used to preach -- ideas that evidently estranged a majority of voters. The transformation has been remarkable. Less than a decade ago, both Rasmussen and Reinfeldt fiercely criticized the welfare state in polemic books. ... But today, both leaders are battling the left over the quality of welfare services for the middle class. ...
An obvious question is how deeply felt this political and philosophical change really is. In a recent interview with Danish newspaper Weekendavisen, Rasmussen said that the welfare model is a necessary condition for the goal of liberalism, defined as a maximization of individual freedom and self-reliance. Obviously, the term “self-reliance” can be found in any old school textbook of economic liberalism, but the introduction of the welfare state into a discourse of individual freedom does stand out as a departure from Rasmussen’s ideological past.
In fact, he appears to embrace a concept of freedom long championed by some on the left ...: one that is as concerned with freedom to as freedom from. From this perspective, government is not a categorical infringement on individual rights; on the contrary, government can and should expand individual freedoms by providing opportunities for citizens. Thus the accessibility of a quality education is a freedom issue, as is the availability of affordable health care, day care, paid maternity and paternity leave, etc. While Rasmussen is probably still to the right of most Danes on several specific welfare issues, he does seem to have revised his basic take-no-hostages, small-government outlook.
But clearly, Venstre’s seeming transformation is also at least partly tactical. ... Taught by bitter experience, Rasmussen’s Venstre has finally abandoned its kamikaze attacks on the welfare state. ...
Thus it’s a bit hard to tell whether the welfare state swallowed the center-right, or the center-right swallowed the welfare state. In the new era, allegiances and appeals have gotten jumbled. In 2000, the year before his first term as prime minister, Rasmussen boasted that analyses showed Venstre to be a greater workers’ party than the Social Democrats, the traditional labor party. And for the recent Swedish elections, one slogan of Reinfeldt’s Moderaterna was that “Sweden needs a new workers’ party.” Perhaps it just got itself one. Or perhaps, with center-right parties slowly reforming it from the inside, the Scandinavian welfare state has a beast in its belly.