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Budget bill sees Sweden shedding more jobs

TT/AFP/The Local · 21 Sep 2009, 08:00

Published: 21 Sep 2009 08:00 GMT+02:00

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One year ahead of parliamentary elections, Sweden's centre-right government presented an expansive 2010 budget bill designed lift Sweden out what Minister of Finance Anders Borg on Sunday called “a historic crisis”.

"We are trying to limit damage from the crisis by taking forceful action to promote jobs and enterprise and by providing support to everyone who has been severely hit by unemployment," Borg said as he formally presented the bill to parliament.

In his presentation, Borg stood by the government's outlook of a 5.2 percent contraction of the export-dependent economy this year, "the weakest growth performance in a single year since World War II."

Growth of 0.6 percent was seen for 2010, before a robust return of 3.1 percent in 2011 and 3.8 percent in 2012.

But unemployment was seen rising to 8.8 percent this year, 11.4 percent in 2010 and 11.6 percent in 2011, before falling back to 10.9 percent in 2012.

The budget bill includes 32 billion kronor ($4.62 billion) in stimulus measures for 2010 and 24 billion kronor for 2011.

The 2010 measures include 10 billion kronor in income tax cuts aimed at encouraging more Swedes to work instead of living off of generous state subsidies.

Since coming to power in late 2006, the government has made the fight against unemployment its main objective.

But instead of declining, Sweden's unemployment rate has risen, from 5.7 percent in August 2006 to 8.0 percent in August 2009.

Much of the increase has been attributed to the global economic crisis, but the sharp rise could hurt the government as it seeks re-election next September.

Local governments, which are in charge of budgets for health care, day care and schools among other things, will meanwhile receive a one-off injection of 10.0 billion kronor, while other allocations will go to expanding higher education and improving the business climate.

Borg was meanwhile optimistic about Sweden's recovery.

The government forecast a public deficit -- which comprises the finances of the state, local governments and pension system -- of 3.4 percent of gross domestic product (GDP) in 2010, 2.1 percent in 2011 and 1.1 percent in 2012.

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"We may experience the quickest recovery in the OECD region (leading industrialized countries), together with Finland and Switzerland," Borg told journalists on Sunday during in a preview of the budget bill.

He stressed the importance of quickly returning to the government's objective of a one-percent public surplus.

"We need to get back to one percent before the next (economic) crash. We will probably experience another crisis cycle within four to five years," he said.

TT/AFP/The Local (news@thelocal.se)

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Your comments about this article

09:45 September 21, 2009 by jose_s
Sounds like they aren't too optimistic about the tax cut strategy to raise employment.
10:59 September 21, 2009 by MacRonald
Time to leave the country with our company.
12:30 September 21, 2009 by Somebody17
I would say to take 1000 Sek from those thousands of immigrants who get paid for doing nothing just because they are war immigrants.

I agree that some of them are traumatized but let's face it that most of them they enjoy staying home and receiving government help. Nobody receives money for doing nothing so what about puting these guys to work?

I know, you will say there are not jobs but they will find somewhere they can fit doing whatever job.

Sweden should have an agreement with every immigrant that want to come here:they will learn the language (the correct one) and they will learn a proffesion. In this way everybody can work!!!
12:44 September 21, 2009 by Jan M
Great. A failing economy. Tax cuts work in a growth environment where opportunities are constrained by a lack of incentive. When the economy is shrinking largely due to external economic pressures tax cuts are largely irrelevant, I have no doubt that there'll be another bout of vaguely racist comments about 'immigrants stealing jobs and benefits'. That's not really where the problem lies either though is it? The problem is that Sweden's economic strengths still lie largely in natural resources and decades old maufacturing industries and in the current climate the world doesn't want either very much. Sure people can engage in some internal semi-racist backbiting to make themselves feel better but when they wake up the next morning Sweden's still going to be on a downward trajectory. The irony is that's with a 'pro-enterprise', 'tax cutting', 'pro-work' government. Reasons for the inverted commas are that the total tax burden in the next couple of years will make Sweden the highest taxed country in the world and the 'pro-work' government has presided over increases in unemployment ever since it was elected. I'm not sure immigrants are the biggest problem. Are you?
14:35 September 21, 2009 by Suprise
Jan M.. Very well put. I couldn't have said it that intelligently myself. :)
22:05 September 21, 2009 by ShaneW
Nothing to do with immigration.

The Swedish government needs to work harder to create a better place for people to launch their own businesses. It is small to medium sized businesses that will create jobs.

Snag is there is so much red tape and high set up costs that many people are putting off from going alone.
22:22 September 21, 2009 by mkvgtired
Be careful what you wish for. The US spent $1,000,000,000,000.00 to slow the increase in unemployment, and it did not even make a noticeable dent. Tax cuts are always preferable to public spending. It allows people to decide where money should be spent rather than the government.
23:24 September 21, 2009 by Jan M
Too many differences between the US and Sweden to extrapolate US failure in public spending. In the US if you flush large amounts of money into a system with a huge population and geographic area and no experience or tradition of admininstering public funds efficiently the result will always be failure. Sweden by contrast has a pretty good history of making public money work which is why the governing party inherited low unemployment and some degree of social harmony and has so much opportunity to progressively dismantle things. Unsurprisingly if you give the public significant amounts in tax cuts they'll spend it on themselves. That creates some jobs selling stuff in shops, a credit binge and another and a more severe economic downturn. If you want a brilliant insight into the future take a look at the UK
17:45 September 22, 2009 by mkvgtired
Jan M, No government is an efficient money manager. Even if one is better than the other. At what point is should it be considered unfair to take what a person has worked for to spend on others? I am not being aggressive, I am really interested in your opinion. The other extreme would be to look at how overtaxed the French are and to ask yourself if that is a road Sweden should head down or not.
18:18 September 25, 2009 by jag2009
The UK is an interesting debate as they split from the U.S.A

With the Icelandic banks gone bust, and the country in bankruptcy, the UK decided to inject "printed money" into the ecconomy. We are now in one-trillion GBP in debt which taxpayers will be paying for for years and years to come. The U.S.A had no choice but to follow suit. I think Sweden is now intouch with the rest of the eu countries with this recession. The only difference being is the kronor and the euro. I believe though sweden will follow suit. Everyone follows the big countries thats just how it works. So from Europe to America we are all in for a lovely time of debt even by the time our children are dead.
01:38 September 26, 2009 by Luke35711
The problem in Sweden, in my opinion, is that the government (Social Democrats) conditioned people psychologically over the decades to expect so much from the State, the community, and big companies. It has worked for a very long time but suddenly there is a big problem. There is little culture of individual ambition, creativity, independence, and striving for achievement which is necessary for jobs in small and medium scale businesses to be created. It is an acute attitude problem!
21:04 September 29, 2009 by mkvgtired
jag2009, unfortunately you are correct. Many future generations are going to be paying for our actions for a LONG time.
00:32 December 20, 2009 by lbkca
This will be a new economic case to be studied for years to come, the Government in it's own stats, it states that there is going to be rising unemployment from 8.8% to 11.6 % ( 132% increase ) and yet they say that the GDP will grow over the same period 4.4%, how is this possible. One other point to be made that smells just a little... "Taxes" have dropped, "State Subsidies" are up and yet the "Public Deficit" is stated to decline in the same period by over 50%... this is some new type of math that they are using... Come clean and tell us the truth... you don't know and have no idea where you are going to be in the next three month let alone the next three years...
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