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Spring budget predicts lower growth

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Spring budget predicts lower growth
15:26 CEST+02:00
The Swedish government, citing financial market turbulence, sharply revised down its 2008 growth forecast on Tuesday, predicting momentum of 2.1 percent rather than 3.2 percent announced late last year.

In a statement presenting the revised budget for 2008, the Swedish Finance Ministry said the Scandinavian country had been affected by global market fictions.

"Even in Sweden growth will slow," the statement said, adding that "gross domestic product should grow 2.1 percent this year and 1.8 percent in 2009."

The ministry added that the public debt should continue to contract and was likely to come to 15.3 percent of output in 2011.

Swedish Finance Minister Anders Borg on Tuesday presented the spring budget, a revision of the budget issued last autumn.

The revised text continued to emphasize employment, a major focus of the centre-right government in power since 2006.

"The impact of a policy for full employment and economic growth is steadily becoming more obvious," the statement said.

The government has launched a string of measures aimed at revitalizing the Swedish labour market and reducing unemployment and sick-leave levels, including lower income taxes and a shorter duration for unemployment benefits.

"More and more people are getting jobs while fewer and fewer are unemployed, on sick leave or in labour market measures. This is gratifying for a government pursuing the overall objective of getting more people into jobs and reducing exclusion," Borg said in the statement.

The government on Tuesday nonetheless revised up its 2008 unemployment forecast to 4.3 percent from the previous prediction 4.0 percent and said the jobless rate would rise to 4.5 percent in 2009.

According to International Labour Organisation (ILO) criteria however, Swedish unemployment should reach 5.9 percent this year and climb to 6.1 percent in 2009, the statement said.

In February this year, Swedish unemployment stood at 6.1 percent, according to figures from Statistics Sweden.

The government said it would announce further measures aimed at improving the labour market in its 2009 budget that is to be presented in the second half of this year.

"During 2007, the number of people excluded from employment fell by 121,000, the largest reduction in the close to 40 years that statistics have been available," the government statement said.

Household consumption was meanwhile expected to grow 2.8 percent this year, down from 3.1 percent in 2007. That figure was expected to shrink further to 2.6 percent next year, according to the statement.

Social Democratic economic policy spokesman Thomas Östros criticized the spring budget for not including additional investment to fight rising unemployment and improve welfare.

“The government states that the boom times are over--but does nothing to deal with it,” said Östros.

“Once again, a centre-right government has wasted the good times.”

Östros said his party planned to put forward a motion to address issues that the Alliance government has ignored, including the long-term unemployed and investing in the jobs of the future.

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