New budget sees lower growth for Sweden

Sweden has cut near term growth forecasts in its latest budget proposal, while at the same time projecting higher unemployment and lower inflation.

The new budget, to be presented on Monday, forecasts that Sweden’s GDP will expand by 1.5 percent in 2008, down from an earlier projection of 2.1 percent growth.

Growth continues to slow in 2009, with the economy only expected to achieve a 1.3 percent growth rate before once again picking up speed in 2010, during which the government expects growth of 3.1 percent, followed by 3.5 percent growth in 2011.

Mats Dillén, head of the National Institute of Economic Research (Konjunkturinstitutet – KI) thinks the government’s assessment of the economy is in line with that of his own organization.

“The differences are very minor, they have a little lower growth than we do. But if we had done a forecast in light of the current situation, our economic growth forecast would have looked a little worse. I think that their macroeconomic picture is in line with what we have said,” he said to the TT news agency.

Unemployment is expected to increase from 6.0 percent in 2008 up to 6.6 percent in 2010, well above the 5.9 percent unemployment the government had previously projected for the year of Sweden’s next parliamentary election.

But in 2011, the growing economy is expected to create more jobs, bringing unemployment back down to 6.0 percent.

The government also expects Sweden’s current high rate of inflation to drop in the coming years.

It projects a consumer price index (CPI) increase of 2.4 percent in 2009, down from 3.8 percent in 2008, and below previous 2009 forecasts of 2.8 percent.

In 2010, the CPI is expected to dip down to 1.3 percent before heading back up to 2.7 percent in 2011.


Sweden boosts spending on civil defence in spring budget

Sweden is to channel a further 800 million kronor to local government and other organisations to bolster Sweden's civil defence capabilities, the country's finance minister has announced.

Sweden boosts spending on civil defence in spring budget

The new funding, which will go to municipalities, regional government, and other organisations, was announced of part of the country’s spring budget, announced on Tuesday. 

“This will strengthen our ability to resist in both war and peace,” Sweden’s finance minister, Mikael Damberg, said in a press conference. “If the worst happens, it’s important that there is physical protection for the population.” 

The government is channelling 91m kronor towards renovating Sweden’s 65,000 bomb shelters, and will also fund the repair the country’s network of emergency sirens, known as Hesa Fredrik, or Hoarse Fredrik, many of which are currently out of order. 

A bomb shelter in Stockholm. Sweden’s government is spending 800m kronor in its spring budget to boost civil defence. Photo: Anders Wiklund/ TT

Sweden’s Social Democrats are currently ruling on the alternative budget put together by the right-wing opposition, making this spring budget, which makes changes to the autumn budget, unusually important. 

The budget includes extra spending of some 31.4 billion kronor (€299m), with 500m kronor going to extra spending on healthcare,  and 10.3 billion kronor going towards supporting Ukrainian refugees, of which nine billion will come from the aid budget. 

The spring budget also includes the so called “pension guarantee bonus”, or garantitillägg, which will see four billion kronor (€390m) going to those with the lowest pensions. 

The bonus, which was the price the Left Party demanded for letting Magdalena Andersson take her place as prime minister, risks being voted down by the right-wing parties in the parliament.