Read news from:
Austria
SHARE
COPY LINK

POLITICS

Swedish finance minister: ‘Decreasing inflation is a sign of improvement’

Sweden’s finance minister on Monday put forward an amendment budget more than four times the size of last year's restrained spring bill, amid hopes the 'economic winter' is beginning to thaw.

Published: 15 April 2024 09:04 CEST
Swedish finance minister: 'Decreasing inflation is a sign of improvement'
Swedish Finance Minister Elisabeth Svantesson. Photo: Jonas Ekströmer/TT

“We are in the midst of an economic winter, with weak growth and rising unemployment. The economic situation is challenging, but the decreasing inflation is a sign of improvement,” said Finance Minister Elisabeth Svantesson as she submitted her budget to parliament.

KEY POINTS:

The bill contains investments to the tune of 17.3 billion kronor, in stark contrast to last year’s spring amendment budget which added only four million to the main autumn budget. Of these, 16.8 billion kronor is allocated to new proposals, rather than various automatic increases.

The government said in a statement that its primary aim was to “lay the foundations for recovery, higher growth and better welfare” as inflation drops and any recession impact is made clear.

Most of the investments had already been announced in dribs and drabs before the day.

“We are reinforcing healthcare with additional resources to the regions and investments for more jobs,” said Svantesson in the statement, as she awarded healthcare services six billion kronor.

Swedish regions have previously warned that they may have to lay off healthcare staff due to the financial crisis, although the centre-left opposition has criticised the six billion as not enough.

“Safety and security in Sweden must increase, which is why we are making additional investments in law enforcement authorities and defence,” continued Svantesson, pouring 1.4 billion kronor into increasing prison cells, and 1 billion to stepping up airport security and baggage handling.

Swedish inflation according to the consumer price index fell to 4.1 percent last month, lower than expected, but Svantesson warned that the tough economic situation wasn’t over.

“We can clearly see that the fight against inflation has produced results, but we must remain persistent and lay the foundations for making Sweden safer, more secure and wealthier,” she said.

Member comments

  1. I really hope Sweden can learn from what Milei is doing in Argentina and picks up multi-decade old knowledge from Austrian school of Economics. Stop printing money, cut state costs, increase economic freedom. Economy will thrive after that. On the contrary, we’re heading towards massive stagnation and continued “economic winter”.

Log in here to leave a comment.
Become a Member to leave a comment.

MONEY

Why is Sweden one of the first countries to lower interest rates?

Sweden, along with Switzerland, is among the first countries to lower interest rates in Europe. Why is this?

Published: 10 May 2024 14:56 CEST
Why is Sweden one of the first countries to lower interest rates?

Sweden joined Switzerland, Czechia and Hungary in the small group of countries to lower their so-called policy rates earlier this week when the country’s central bank lowered the interest rate from 4 percent to 3.75.

There are natural explanations for this, according to financial experts.

“Sweden’s economy is more affected by interest rate hikes,” head economist at Nordea, Torbjörn Isaksson, told TT newswire.

Sweden’s GDP has shrunk four quarters in a row, putting Sweden at the bottom of the table when it comes to growth over the past year. Unemployment and bankruptcies have also gone up more than elsewhere.

READ ALSO:

Isaksson believes that that’s the main reason Sweden is lowering its policy rate before other central banks, although he predicts the European central bank is only weeks away from lowering its key interest rate.

Although inflation in Sweden has dropped, the country still has higher inflation than both Denmark and Finland – the main reason for cutting the rate in Sweden is the fact that households here are so much more sensitive to high interest rates.

“A high level of household debt and short term loans has meant that high interest rates have hit harder here than elsewhere,” Isaksson said.

“That’s why there’s a greater need to take our foot off the brakes slightly.”

Having said that, Sweden’s economy still has a strong foundation.. Swedish business remains competitive, salaries are set “responsibly”, and the country has strong state finances, Isaksson said.

“Lowering interest rates while remaining hawkish is the best way to go,” SEB head economist Robert Bergqvist said.

“The central bank is showing that they’re taking this first step, they’re ready to take further steps, but they want to keep expectations low.”

Bergqvist described the Swedish economy as being out in the open sea, exposed to strong waves.

“We have strong state finances which work as an airbag, but I think the central bank is happy it can show that it’s reacting to what’s happening in the Swedish economy,” he said.

“It would almost be professional misconduct to not lower the interest rate based on what’s happening with inflation, so it’s hard for the central bank to avoid doing so.”

SHOW COMMENTS