Borg unveils budget amid slow growth fears
Published: 20 Sep 2012 08:11 GMT+02:00
Updated: 20 Sep 2012 08:11 GMT+02:00
Despite a stable Swedish economy, Finance Minister Anders Borg fears that the country’s growth may prove weaker than the government has hoped for in the budget, set to be presented on Thursday.
Sweden’s economy is expected to expand this year, with the GDP growing by 1.6 percent. For next year, an increase by another 2.7 percent has been predicted.
According to a report from national broadcaster Sveriges Radio (SR), the government believes that the finances will start recovering next year, with a growth of 3.7 percent by 2014.
Unemployment is also expected to drop from 7.5 percent next year to 6.7 percent in 2014. The government is nevertheless counting on a running deficit in the state finances this year and next, but for 2014 they are predicting a surplus of 0.3 percent.
National debt will grow to 31.3 percent of the GDP this year before beginning to decrease.
According to news agency TT, these figures are more or less the same as the finance minister presented a few weeks ago.
However, in an opinion piece in daily Dagens Nyheter (DN) on Thursday, Borg wrote that there is a risk that predictions for the budget that will be presented later on Thursday won’t hold up.
“The combination of weak banking systems and fragile state finances in several countries within the eurozone makes the risk of a less favourable growth rate seem more likely than the headline scenario,” Borg wrote.
No great surprises are expected when Borg presents the government’s budget to the Riksdag.
Most of the government’s new ventures, totaling some 23 billion kronor ($3.5 million) from the budget, are already known, such as investing into infrastructure, cutting corporate taxes, creating more places at Swedish universities as well as more money to research and a boosted labour market policy for Sweden’s younger population.
“Sweden’s strong position can accommodate forceful investment into Sweden’s future that will provide energy into the economy while the international finances weaken,” Borg wrote.
According to TT, Borg risks being accused of being too optimistic in the Riksdag debate following the budget presentation, as the Social Democrats are not only critical of the government's labour policies but have also started to question whether the government can really afford all their new ventures.