Borg cuts GDP forecast in spring budget

Borg cuts GDP forecast in spring budget
Sweden's finance minister Anders Borg presented the spring fiscal policy proposal on Thursday and announced a cut in the GDP growth forecast to 2.5 percent in 2010, 3.9 percent in 2011 and 3.5 percent in 2012.

“The winter is over and the spring is here,” Borg said in a press conference at the government offices on Thursday morning, which was interrupted for more than ten minutes after a fire alarm drowned out the proceedings.

“We can be happy that it is not economic alarm bells that are ringing,” Borg joked as he resumed the press conference.

Borg continued to emphasise that despite the cut in the GDP forecast, the government is confident that Sweden’s recovery would arrive earlier than forecast in the main 2010 budget and ahead of EU partner countries. Unemployment is forecast to decline and the jobs market to recover over the course of 2010.

“Several factors indicate that Sweden has managed the crisis better than many other countries thanks to a prudent fiscal policy,” Anders Borg said although he warned that challenges remain for the economy.

“The economy remains fragile and some groups have been hit hard by the crisis. Furthermore it is important to ensure that unemployment does not get stuck at a high level. That is why we have proposed a range of further measures in this spring fiscal policy proposal to cultivate the economic recovery,” he said.

The government has previously announced a raft of investments totalling 4.9 billion kronor ($688) during 2010 as the September election draws closer.

Among the measures are included income tax cuts for pensioners and a rise in supplementary child benefits, measures that were revealed last week in advance of Thursday’s presentation of the budget proposition.

The government has also confirmed its pledge to invest in summer jobs for young people, and to halve qualification times for new start jobs – which provide a deduction to employers who recruit an unemployed person.

Borg went on the offensive and attacked his political opponents arguing that left-green coalition policies would hinder Sweden’s recovery and harm the demand for labour by making it more expensive to employ staff.

The government flagged for a hike in property taxes on hydro-electric power stations to 2.8 percent in 2011, which will help to pay for the abolition of the accountant requirement for around 250,000 companies.

The finance minister argued that a raft of infrastructure investments in the west of Sweden and in Skåne would help expedite the economic recovery.

Anders Borg underlined the importance of returning public finances into surplus and stated that they are developing better than projected in the main 2010 budget proposition. Forecasts indicate that the public finances will show a 1.3 percent surplus in 2013.

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