Sweden headed for ‘untested ground’ as budget deadline draws near

Sweden headed for 'untested ground' as budget deadline draws near
Incumbent Prime Minister Stefan Löfven. Photo: Hanna Franzén/TT
UPDATED: Stefan Löfven met the speaker of parliament on Monday to update him on talks to form a government. Meanwhile, the budget deadline draws ever-nearer.

Social Democrat leader and incumbent Prime Minister Löfven was last week asked to lead government negotiations with the other parties, after opposition leader Ulf Kristersson failed in his efforts.

He was given a two-week deadline, which means he has one more week to go. Löfven has said he wants to form a cross-bloc coalition government, but it is not yet clear whether or not he will succeed.

If he fails, the speaker may again hand the task over to someone else.

Halfway through the two-week period, Löfven told press on Monday that he planned to continue talks, which had so far been “respectful and constructive”, but added: “It is difficult and complicated. No one has changed their position.”

They are working against the clock. Sweden has now gone more than 40 days without a new government, and although there is no strict deadline, there is one obstacle looming on the horizon: the budget.

A proposal for Sweden's 2019 budget has to be put forward to parliament by November 15th, and it is looking increasingly unlikely (though still not improbable) that a government will be in place by then.

This means that Löfven's outgoing 'lame-duck' coalition – which is in charge of running Sweden until a new government is installed – may have to put forward a budget proposal.

Sweden's Finance Ministry last week invited finance spokespeople from the centre-right opposition parties to talks in order to start preparing the groundwork for a politically neutral budget.

“It is untested ground,” Urban Hansson Brusewitz, former Finance Ministry budget chief and current director-general of Sweden's National Institute of Economic Research, told newswire TT.

A caretaker government has almost the same powers as a normal government, but is not meant to make any major radical or partisan decisions – which would normally include those part of budget proposal.

But it is unclear what kind of proposals would be comme il faut. All parties have pledged to cut taxes for pensioners, but such a major decision on tax reforms may still be deemed 'too political' for a neutral transition budget. Similarly, the Armed Forces have asked for an additional three million kronor next year, and the police are also hoping for an increased budget. There is broad political support for both in theory.

“You're not supposed to introduce new policies in a transition budget, but if you do so in a broad parliamentary agreement – either in the budget itself or in parliamentary debate – it should work,” Hansson Brusewitz told TT.

Proposals that however may be cut from a transition budget is the centre-left government's tax rebate on electric bicycles and a larger budget for schools in troubled areas. “There are enough problems already without having a great row about a transition budget,” said Hansson Brusewitz. “I would not be surprised if there's a discussion if a transition government includes some of those proposals.”

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