Read news from:
Austria
SHARE
COPY LINK
For members

ECONOMY

Swedish finance minister opens up for rise in spending in next budget

Sweden's finance minister, Elizabeth Svantesson, has revealed that she has 60 billion free to spend on tax cuts or new measures, as she signalled a more expansive fiscal policy for 2025.

Published: 22 August 2024 16:25 CEST
Swedish finance minister opens up for rise in spending in next budget
Sweden's finance minister Elisabeth Svantesson gave an update on the Swedish economy at Harpsund, the PM's country house outside Stockholm where budget talks are ongoing. Photo: Fredrik Sandberg/TT

The finance ministry has set the so-called reformutrymme, literally “space for reforms”, at 60 billion, up from the 40 billion of spare cash the government had for new measures in its 2024 budget, which she said would be allocated both towards putting more money directly in people’s pockets and towards investment in welfare and infrastructure. 

“It’s not all wrapped up yet, but a lot of it is wrapped up,” Svantesson said of the ongoing budget discussions between the three government parties and the far-right Sweden Democrats. “We believe that 60 billion kronor is a good balance. It’s a significant rise from this year.”

She said the 20 billion kronor in increased spending room would enable the government to be bolder in its plans, and could also be augmented by making cuts in some places in order to free up money for spending elsewhere. 

  • Don’t miss The Local’s news and analysis about the state of the Swedish economy by downloading our app (available on Apple and Android) and then selecting Economy in your Notification options via the User button

“Then we can do a lot more if we prioritise in other ways: if you don’t promise something for everyone, but instead do what you think is important,” she said.

She promised proposals to boost household spending power and stimulate the economy, something she said was necessary given that Sweden remained in an economic slump.  

“In a long-drawn-out economic downturn the economy needs to be stimulated,” she said. 

At the same time as the press conference, the government adjusted down its forecast for the economy, with GDP growth for 2024 reduced from the 1.4 percent forecast in June to 0.8 percent. 

It expects GDP growth to be higher in 2025, however, increasing the forecast from 2.4 percent to 2.5 percent. The unemployment rate for both 2024 and 2025 is predicted to be 8.3 percent, a slight reduction from June’s forecast. 

The government expects inflation to come in at 2.8 percent in 2024, falling to 0.9 percent in 2025. 

Member comments

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

MONEY

How will Sweden’s new budget affect foreign residents?

The Swedish government will present its autumn budget on September 19th, but how will the proposals we know about so far, like measures to attract foreign talent and money for Swedish classes, affect foreigners?

Published: 17 September 2024 13:31 CEST
How will Sweden's new budget affect foreign residents?

Measures to attract foreign talent

The budget will include a range of reforms with the aim of improving the Swedish economy and Swedish competitiveness, with special emphasis on attracting talent and promoting investment in the country.

This, among other things, includes 5 million kronor to Visit Sweden in order to promote Swedish tourism, 8 million kronor on attracting foreign talent in 2025, and 16 million kronor to Business Sweden in order to identify and contribute to solving obstacles to investment for Swedish companies and foreign companies in Sweden, as well as attracting strategic investment.

The government will also set aside 10 million kronor in 2025 for an international investment conference, in order to position Sweden as an attractive destination for foreign investment.

Money towards integration and Swedish classes

The government also plans to spend 196 million kronor on increased integration efforts, including three-year intensive courses for children who do not speak any Swedish at home and extra money for after-school fritids clubs to provide Swedish classes for children with foreign backgrounds.

Around 31 million kronor would go towards assisting integration for foreigners who are stay-at-home parents, especially women, in order to assist them in finding work. This would include language lessons, as well as study and career advice for refugees in particular, as well as other women born abroad.

Another 4 million kronor of the 196 million kronor total would go towards mapping foreigners’ Swedish skills – reading, writing and listening – in order to understand which integration measures would be useful.

Finally, 40 million kronor would go towards language courses for certain key workers, like staff in elderly care homes and preschools, a policy which was originally introduced by the former government in 2021. This would last until 2026.

Tax-free investment savings accounts

ISKs (Investment Savings Accounts) were introduced in 2012 as a way for people in Sweden to easily invest in shares and funds. An estimated 3.5 million people in Sweden have an ISK, with 75 percent of these accounts having a balance of 300,000 kronor or less.

Currently, they’re not subject to capital gains tax, but they are instead taxed at a fixed rate – known as schablonsskatt – an annual rate paid on the entire value of the sum held.

Under the new proposal, tax on ISKs, as well as KFs, another type of investment savings account taxed in the same way, would be scrapped for any accounts with a balance of less than 150,000 kronor from next year, rising to 300,000 in 2026. 

For foreigners living and working in Sweden, this will make saving in equities, bonds, and funds while resident in Sweden significantly more attractive.

As the new Pan-European Personal Pension Product (PEPP) is also included, anyone living in Sweden can even keep their tax-free savings accounts when moving to another EU country – even if they’re not an EU citizen.

Tax cuts

Sweden’s government has announced plans to increase jobbskatteavdraget or employment tax credit, a rebate given to everyone who has a job.

If you have a job in Sweden and do not depend on benefits for your income, you qualify for the tax credit, which was brought in in 2007 to ensure that people would always be better off in work than on benefits.

As a percentage of income, those on the lowest salaries get the biggest tax reduction, with the maximum tax reduction next year set at 10,633 kronor. 

You can see a breakdown of how people in different income brackets will be affected by the increase in this article.

People on the median salary of 462,000 kronor per year (38,500 kronor a month) will see their tax bill shrink by 3,671 kronor.

The reduction will be applied automatically and is available to everyone who works and does not receive benefits, whether you’re a Swedish citizen or not.

Pensioners won’t be left out either – they’ll see tax cuts equivalent to the employment tax credit, to ensure they’re not worse off than people in work.

Plans to curb migration

The government has also announced plans to allocate over 4.4 billion kronor to restricting migration over the next three years: 513 million in 2025, rising to 2.5 billion in 2026 and 1.35 billion in 2027.

A large share of this – 1.4 billion in 2026 – will go towards encouraging migrants to return home voluntarily, a scheme which is only available to refugees, quota refugees, people in need of subsidiary protection on the grounds of exceptionally distressing circumstances, or family of these groups.

The rest of the funds will go towards reducing fraud and misuse of the system and an increase in checks on foreigners in the country, the government has said.

Funds to combat unemployment

Sweden’s unemployment rate is currently at its highest level in ten years, not counting the pandemic. The government is therefore planning a package of budget measures to try and combat this, including 900 million kronor to regional vocational training for adults – around 11,000 more study places. 

The measures also include raising the grant for supervisors offering apprenticeship training, as well as 79 million kronor for the Public Employment Agency to support people who have been out of work for a long time.

SHOW COMMENTS