Finance minister Anders Borg said on Friday that the Swedish GDP will grow by 3.7 percent this year and 3.3 percent next year. In October’s budget he had predicted growth of 3.3 percent for this year and 3.1 percent next year.
Borg said unemployment would fall from 4.7 percent to 4.1 percent between 2006 and 2007.
Tax cuts and and spending increases in some areas would be possible, said Borg following ministerial negotiations at Stockholm’s Haga Slott on Friday.
One area likely to get more money is migration, with Migration Minister Tobias Billström’s department hacing to deal with an increasing number of asylum seekers. The Swedish Board of Migration has said it will need more staff to be able to carry out its duties.
Borg would not say how much room for manoevre he would have in his budget, nor would he reveal any specific plans to be included in the spring budget, due to be presented on 16th April. He did, however, say that he believed that current economic conditions would allow a further tax reduction on earned income to be introduced in January 2008.
“But that is on the condition that the prognoses turn out to be correct,” he said.
Despite the promising economic signals, Borg vowed to hold tight on Sweden’s pursestrings when ministers come asking for extra cash. High growth rates need to be managed in order to last, he argues.
The government’s spending priorities are creating jobs and better conditions for entrepreneurs. Among the planned programmes are the ‘job and development guarantee’, under which people who are long term unemployed will be given help to find work while at the same time doing work in the community.
The increase in the growth prognosis is due to a number of factors. Employment rates have been rising unexpectedly fast, households’ disposable incomes have been increasing and international growth is stronger, the government says.