Swedish parliament votes through centre-right budget

Sweden's parliament on Wednesday backed a budget proposal from the Moderates and Christian Democrats, currently in opposition.

Swedish parliament votes through centre-right budget
Parliament pictured during the budget vote. Photo: Anders Wiklund / TT

The caretaker government presented a transition budget, put together in consultation with the opposition Alliance and the Left Party. This was done in order to keep the proposal as politically neutral as possible, because caretaker governments are not meant to make partisan decisions.

But opposition parties are still allowed to put forward their own budget proposals, and it was the suggestion of Alliance parties Moderates and the Christian Democrats that won the most votes.

This was possible after the Sweden Democrats, a far-right party and the third largest group in parliament, voted for the opposition budget.

The other two parties of the Alliance group, the Centre Party and Liberals, each put forward their own budgets and did not vote for any of the other suggestions. The defeat came as a blow for centre-left Social Democrat leader Stefan Löfven, who faces — and is expected to lose — a parliamentary vote on Friday as to whether he will be accepted as Sweden's next prime minister.

The Moderate-Christian Democrat budget includes changes to income tax, such as raising the rate for one tax threshold from a monthly salary of 40,000 kronor to 42,000.

A tax on flights, introduced by the previous centre-left government for environmental reasons last year, would also be abolished in the new budget.

Sweden does not yet have a government, two months after the election, so whatever shape the next government takes, this is the budget they will have to work with.

Some changes can be made in the spring budget, and in certain special circumstances it's possible to ask parliament for adjustments as early as January, but there are several areas including income tax rates where changes can't be made more than once a year.

TIMELINE: Everything that's happened in Swedish politics since the elections

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Sweden facing ‘the highest inflation in 30 years’

Sweden last month saw the highest levels of inflation in more than 30 years, according to the latest figures from Statistics Sweden.

Sweden facing 'the highest inflation in 30 years'

Consumer prices rose 6.4 percent in April, the agency reported in its latest monthly figures, well ahead of the 6.1 percent rise predicted by analysts and up from 6.1 percent in March. 

“This shows high inflationary pressure. It’s in line with consensus, but it’s 0.2 percentage points higher than what the Riksbank has been predicting,” said Olle Holmgren, an economist with SEB. 

Rising prices of meat, vegetables and other groceries were the main reasons for the rise, with the prices of electricity and fuel falling month-on-month. If energy prices are excluded, inflation was 4.5 percent in April, up from 4.1 percent in March. 

“Restaurant prices are rise quite a bit for the second month in a row. That can be linked to grocery prices,” Holmgren said. “Then there are higher prices generally, but grocery prices are increasing rapidly.”

Holmgren predicted that the inflation rate could continue to rise in the coming months, increasing the risk that Sweden’s public bank, the Riksbank, will hike interest by 0.5 percentage points — two slots — in September. 

Fuel prices fell in April compared to March, although diesel remains 56.7 percent higher than a year ago and petrol 36 percent higher. 

The price coffee is higher now than at any time since it joined the consumer price index in 1983, after rising 29 percent so far this year. 

Other groceries which have risen significantly in price this year are cabbage and tomatoes, which rose in price by 43 percent ad 33 percent respectively. 

The price of avocado has fallen by 14 percent this year, while pickled herring has fallen in price by 16 percent.