Borg’s ‘budget enthusiasm’ irks critics

Sweden's finance minister unveiled a rough outline of his autumn budget on Friday, wedding 25 billion kronor ($3.9 billion) to support a gradual recovery. Critics said Sweden would have to pick up the tab for Anders Borg's "budget enthusiasm" at a later date.

Borg's 'budget enthusiasm' irks critics

The finance ministry said it would keep up its fight to ward off a budget deficit.

“We will use the strength of our public finances to energize and support a recovery. At the same time we will maintain safety margins. Laying a firm foundation for recovery is key to driving unemployment down,” Finance Minister Anders Borg said in a statement after meeting with fellow ministers at the prime minister’s summer residence Harpsund.

Borg told reporters that he as yet did not have details on how he would support the recovery of Sweden’s export-oriented economy, which has stayed relatively buoyant through the financial crisis but has nonetheless been hit by weak demand.

“Expenditure ceilings and surplus targets will be maintained and secured,” the finance ministry said in a statement. “The return to a 1 percent surplus will be gradually achieved as unemployment decreases and resource use approaches balance.”

In June, however, the National Institute of Economic Research (NIER) estimated that Sweden had about 6 billion, not 25 billion, to play with in its autumn budget.

In the early 2000s, Sweden adopted a target of an annual net lending surplus of one percent over the business cycle.

“There is currently a deficit in the general government sector, largely due to the recession. If tax cuts or expenditure increases of 25 billion are implemented next year, consolidation measures are needed to meet the 1 percent target in the medium term” NIERs Head of Public Finance Analysis Erik Höglin told the Local.

“It is not impossible to enact reforms of 25 billion, but there will be a need to make savings later.”

Borg told the Svenska Dagbladet newspaper on Friday that he did not share NIER’s outlook on the situation. He also cited recent statistics on household consumption to support his position.

“The reasonable starting point is in supporting growth and households, and we see a better performance for households,” Borg told reporters on Friday afternoon. “We want to strengthen the conditions for jobs and growth.”

The plans were criticized, however, by the shadow finance minister Magdalena Andersson.

“What the government is doing is borrowing for tax cuts and it’s not a responsible economic policy,” the Social Democrat financial spokeswoman told the TT news agency in reference to the prime minister’s promise that Swedes would soon have a new income tax reduction on their plates.

“If you want to borrow, you should invest in schools, education, and jobs,” she said.

Union boss Karl-Petter Thorwaldsson also joined the choir of naysayers, asking instead that Sweden increase spending.

“If you want to get at unemployment, you have to increase expenditure at a higher rate the coming years,” Thorwaldsson told TT. “The government has chosen to solely use income tax reductions and that has a very small effect.”

TT/The Local/og/at

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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.