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POLITICS

Sweden Democrats threaten government crisis over biofuels obligation

The far-right Sweden Democrats are threatening to push Sweden's three-party ruling coalition into a political crisis as they fail to reach agreement over how drastically to cut the country's biofuels obligation, a key part in its plan to reduce emissions.

Sweden Democrats threaten government crisis over biofuels obligation
Sweden Democrat finance spokesperson Oscar Sjöstedt has said that if an agreement is not made it will trigger a government crisis. Photo: Caisa Rasmussen/TT

The party is claiming that a pledge in the Tidö Agreement calling for the biofuels obligation, or reduktionsplikt, to be cut to the “lowest EU level”, should mean that the amount of biofuels that must be blended into petrol and diesel and Sweden should be cut to close to zero, rather than to about half the current share, as suggested by ongoing EU negotiations. 

“We are being tough in the negotiations because of the power we have as the biggest party in this bloc,” Oscar Sjöstedt, the party’s finance spokesperson told TV4. “There is going to be a change at the end of the year that is going to be pretty significant and substantial, that I’m 99.9 percent certain about, otherwise we will have a government crisis.” 

The Liberal Party is pushing for a much less severe reduction, perhaps to a little more than half the current level, where 30.5 percent of all petrol and diesel must be biofuel. 

“We have signed up to a temporary reduction in the biofuels obligation, and it’s clear that that is what we are going to do, but zero is not an alternative for us,” the Liberal Party’s leader Johan Pehrson told TV4.

The decision to reduce the amount of biofuel in the mix at Swedish pumps has made it much more difficult for Sweden to meet its targets for emissions reductions, putting pressure on Pehrson’s colleague, Environment Minister Romina Pourmokhtari. 

Next Wednesday, Pourmokhtari will have to defend the extent to which her government’s policies have pushed Sweden away from being able to meet its 2045 target of net zero emissions when the The Swedish Climate Policy Council reports on the country’s progress towards its target. 

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POLITICS

Full steam ahead for Swedish economy in new three-part budget bill

Sweden has won the fight against inflation and expects GDP to grow next year, Finance Minister Elisabeth Svantesson proudly proclaimed as she presented the government's budget bill for 2025.

Full steam ahead for Swedish economy in new three-part budget bill

“Going forward, the task will be to ensure that high inflation does not return, and at the same time to implement reforms and investments that build a more prosperous, safer and more secure Sweden for generations to come,” said Svantesson in a statement on Thursday morning.

The government predicts that Swedish GDP will grow 2.5 percent next year followed by 3.2 percent 2026.

Unemployment, however, is expected to remain unchanged at 8.3 percent in 2025, only beginning to drop in 2026 (7.9 percent, according to the government’s predictions, followed by 7.6 percent in 2027).

Svantesson told a press conference that a strong focus on economic growth would create jobs.

The 2025 budget, worked out in collaboration between the right-wing government coalition and far-right Sweden Democrats, is far more expansionary than the restrained budget Svantesson presented last year when Sweden was still fighting high inflation: 60 billion kronor towards new reforms rather than 39 billion kronor for 2024. Almost half, 27 billion kronor, will go towards funding lower taxes.

ANALYSIS:

Svantesson highlighted three areas in which new reforms are prioritised:

  • Strengthening household purchasing power after several years of the high cost of living putting a strain on household budgets, with reforms set to push the tax burden to its lowest level since 1980, according to the government.
  • Reinstating the “work first” principle, meaning that people should work rather than live on benefits. Some of the measures include language training for parents born abroad and increasing the number of places in vocational adult education.
  • Increasing growth, focusing on investments in research, infrastructure and electricity supply.

In the debate in parliament on Thursday, the centre-left opposition is expected to criticise the government for lowering taxes for high earners and not investing enough in welfare. 

Investments in healthcare, social care and education are significantly reduced in this budget compared to last year: down from 16 billion kronor to 7.5 billion kronor. 

Meanwhile, the hike of the employment tax credit (jobbskatteavdraget) – a tax reduction given to people who pay tax on their job income – is expected to lead to a 3,671 kronor tax cut for people on the median salary of 462,000 kronor per year.

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