0821 GMT October 31, 2020
Sweden’s economy will shrink around 4.6 percent this year, the minority coalition said its budget on Monday, a milder hit than many other European countries, some of which are being forced to re-impose COVID restrictions after a surge in new cases, Reuters reported.
“Economic policy is going into a new phase,” Finance Minister Magdalena Andersson told reporters. “It is about a record-large budget to restart the Swedish economy: 100 billion so that we can work our way out of the crisis.”
The Social Democrat and Green coalition said the budget would focus would be on boosting jobs, welfare and supporting the switch to a carbon-free future.
Most measures, agreed with two small, center-right parties which help keep the coalition in power, were already known.
Individuals and companies will get a tax cut and local authorities and welfare services more cash while around 10 billion crowns will go toward fighting climate change.
The budget is expected to create around 75,000 jobs.
Long term winners
While Sweden looks to have got off relatively lightly economically in the short term, analysts caution that it is too early to pick the longer term winners and losers from the pandemic.
Much will depend on how government largesse, including Europe’s €750 billion recovery find, is spent.
Sweden also faces a number of structural challenges, not least in the labor market where unemployment among young people and immigrants is uncomfortably high.
A dysfunctional housing market also threatens long-term economic stability while funding the country’s comprehensive welfare model as society as a whole ages will require a huge increase in productivity.
The government has promised to keep the taps open, at least for the next few years — tax cuts and spending will boost the economy by 85 billion in 2022.
But with a general election due that year, longer term policies remain unclear. The last national vote resulted a virtual stalemate between the center-left and center-right blocs and there is little evidence that voters are any clearer about what they want now.