OECD slams Swedish fiscal policies

The OECD is critical of Sweden’s plan to cut taxes and raise funding for local government next year, saying these measures are ill-timed given the country’s booming economy.

In its latest report, the OECD predicts continued growth in Swedish exports amid rising inflation, which means that the Riksbank ought to hike the key rate already next week. Swedish annual growth is forecast at more than 3 per cent until 2006.

According to OECD, tax cuts in Sweden will lead to greater consumption while exports rise further and investments increase. These combined will result in a gradually improving labour market, with unemployment seen declining to 4.3 per cent in 2006 from 5.6 per cent this year.

OECD’s biggest worry for Sweden is inflation, which it predicts at 2.5 per cent in 2006 – a signal for the Riksbank to tighten credit.

Riksbank Governor Lars Heikensten declined to comment on the OECD report, saying he has to read it first. But based on his speech yesterday in which he relayed a bleaker growth outlook, the Riksbank seems averse to immediately hiking the key rate, reports DN.

Handset sales seen down 2005

Harvest time seems to be over for handset makers – at least for next year as telecom analysts predict a drop in mobile phone sales. In terms of cash, Nokia, Sony Ericsson and other handset makers can, at best, hope for flat growth in mobile phone sales next year.

“It is correct that the market as a whole will hardly grow next year,” a source at Sony Ericsson told DI. Research group Gartner expects global handset sales to drop by 4 per cent next year.

Telia has best 3G network in Sweden

TeliaSonera has the best 3G-network coverage in Sweden, according to a test conducted by SvD in co-operation with Mobil publication. Tele 2 came in second while newcomer 3 came in third place. Vodafone landed at the bottom of the ranking.

Tele2 offers cheapest subscription

Tele 2 launched a new subscription service this week that offers the cheapest calling rate in Sweden at 69 öre per minute. With the lower flat rate Tele2 hopes to avoid the costly subsidies for handsets.

Inheritance tax to be scrapped

After twists and turns the proposed abolition of the inheritance and gift tax yesterday won the nod of the standing committee on taxes, paving the way for Riksdag approval of the bill. However, entrepreneurs assail the bill because taking interest on so-called tax allocation reserve will finance the scrapping of the tax.

Conflict-free wage deal

In what was described as a relatively conflict-free wage agreement, 100,000 state employees reached a three-year wage agreement guaranteeing them a 7.3 per cent pay hike.

Sources: Dagens Nyheter, Svenska Dagbladet, Dagens Industri


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